KUALA LUMPUR - The ringgit opened lower against the US dollar on Friday on better demand for the greenback due to a more hawkish stand by the United States Federal Reserve (Fed), said an analyst. At 9.01 am, the local note fell to 4.4735/4790 against the US dollar from Thursday’s close of 4.4730/4780.
Bank Muamalat Malaysia Bhd head of economics, market analysis and social finance Dr Mohd Afzanizam Abdul Rashid said the 10-year US Treasury yield has surpassed the four per cent level, hovering at 4.06 per cent currently.
"While the European economies continue to record higher inflation rate for the latest print at 8.5 per cent, it still resulted in a strong US dollar.
"As such, the ringgit should trade on the weaker side,” he told Bernama.
Meanwhile, SPI Asset Management managing director Stephen Innes said it has been a tough week for the Asian foreign exchange due to a more hawkish Fed narrative, with the market increasingly pricing in a higher terminal Fed funds rate.
He said as a consequence, higher US Treasury yields have taken a toll on the ringgit.
"The ringgit is now caught between misaligned macro drivers -- a stronger China outlook and a persistent hawkish Fed.
"However, the restart of China data releases this week, where the PMI came in strong, alongside the likely pro-growth tone to the two-session policy event, should offer a better macro setup for Asian foreign exchange and the ringgit.
"For today, I expect the ringgit to trade in a tight range but may trade a tad stronger due to the China impulse, but the hawkish Fed will likely provide a drag until US economic data turns lower,” he said.
Innes said the 10-year US Treasury yield was up by eight basis points to 4.07 per cent, the highest since Nov 9, 2022.
The ringgit traded higher against a basket of major currencies. The local unit appreciated against the euro to 4.7468/7527 from 4.7539/7592 yesterday, improved against the Japanese yen to 3.2737/2780 from 3.2772/2813 and rose against the British pound to 5.3543/3609 from 5.3546/3606 previously.
The ringgit however traded lower against Asean currencies.
It decreased versus the Singapore dollar to 3.3238/3281 from 3.3210/3252 on Thursday and depreciated vis-a-vis the Thai baht to 12.8697/8929 from 12.8583/8789.
The ringgit was flat against the Philippine peso at 8.13/8.17 from 8.13/8.14 and fell against the Indonesian rupiah at 292.70/293.20 from 292.60/293.20 yesterday. - BERNAMA