KUALA LUMPUR, Aug 13 — The ringgit extended its uptrend against the United States dollar today, supported by a 0.43 per cent drop in the US Dollar Index to 98.097 after headline US inflation came in at a lower rate than expected.
At 8am, the local note rose to 4.2115/2285 against the greenback from yesterday’s close of 4.2290/2320.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the ringgit is likely to be well supported today, with the US dollar-ringgit expected to trade between RM4.20 and RM4.23 amid a high probability of a US interest rate cut.
He noted that the softer US inflation rate of 2.7 per cent was largely driven by a moderation in the Owner’s Equivalent Rent (OER) to 4.1 per cent, after holding at 4.2 per cent for two consecutive months.
The OER accounts for about 25 per cent of the Consumer Price Index weightage, he said.
“The US benchmark equity indices rose more than 1 per cent, while the yield on the two-year US Treasury note fell by four basis points to 3.73 per cent.
“This suggests the lower-than-expected headline inflation has strengthened expectations for a US rate cut, fuelling the rally in the equities market,” he told Bernama.
At the open, the ringgit, however, traded mostly lower against major currencies.
It fell versus the Japanese yen to 2.8502/8619 from yesterday’s close of 2.8490/8512 and declined against the euro to 4.9182/9380 from 4.9090/9125 yesterday, but appreciated against the British pound to 5.6876/7106 from 5.6905/6946.
The ringgit also trended higher against regional peers.
It advanced against the Singapore dollar to 3.2825/2960 from 3.2867/2893 at yesterday’s close and strengthened versus the Thai baht to 12.9965/13.0570 from 13.0135/0300.
The local note also appreciated versus the Indonesian rupiah to 258.5/259.6 from 259.6/259.9 previously and rose vis-a-vis the Philippine peso to 7.38/7.41 from 7.41/7.42
