Ringgit opens higher ahead of BNM's MPC meeting

KUALA LUMPUR - The ringgit opened higher against the US dollar and other major currencies this morning, in anticipation of Bank Negara Malaysia's (BNM) decision on the overnight policy rate (OPR).

At 9 am, the local unit rose to 4.6445/6515 versus the greenback compared to 4.6480/6525 at Tuesday’s close.

The two-day Monetary Policy Committee (MPC) meeting kicks off today, and according to an analyst, the central bank is expected to maintain the OPR at 3.0 per cent.

Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the ringgit could trade in the RM4.64-RM4.65 range versus the US dollar as market participants await BNM’s OPR decision.

At the same time, he said talks of a possible shift in the global monetary stance should gain momentum going forward.

"Thus far, the Purchasing Managers Index (PMI) from various jurisdictions have shown a weakening trend, indicating that businesses have become guarded in their business outlook,” he told Bernama.

He said manufacturing PMI for Australia, South Korea, Japan and China were lower in June at 48.2, 47.8, 49.8 and 50.5, respectively.

In Malaysia, the PMI index eased to 47.7 in June from 47.8 in May.

Meanwhile, SPI Asset Management managing director Stephen Innes said the ringgit sentiment has improved in tandem with the strong yuan as the People's Bank of China has been fixing the yuan rate much stronger in recent days to temper the weakening trend.

"Given the strong correlation between the two currencies, the strong yuan encourages local exporters to sell the US dollar to buy the ringgit.

"Last week, BNM hinted at a possible intervention, namely a rate hike. However, with the yuan and ringgit currently stabilising, a rate hike is unlikely, but they could still use heavier verbal intervention to encourage exporters to sell the US dollar and buy ringgit," said Innes.

He added traders are also navigating China's services PMI report for June ahead of the United States Federal Open Market Committee meeting minutes set to be released later today, noting that any weakness in the China data would be bad for the ringgit.

Meanwhile, the ringgit was traded higher against a basket of major currencies, except against the British pound where it fell to 5.9050/9139 from 5.9016/9073 at the close yesterday.

It gained vis-a-vis the euro to 5.0560/0636 from 5.0654/0703 at Tuesday’s close and strengthened against the Japanese yen to 3.2153/2204 from 3.2184/2217 previously.

The local note also traded higher against other Asean currencies.

The ringgit improved versus the Singapore dollar at 3.4419/4476 from 3.4458/4494 on Tuesday and rose against the Thai baht to 13.3126/3395 from 13.3230/3420 yesterday.

It had also increased against the Philippines’ peso to 8.40/8.42 from 8.41/8.42 at the close yesterday and went up against the Indonesian rupiah to 309.7/310.3 from 309.9/310.4 previously. - BERNAMA