Ringgit Finds Support Driven By Mild Demand

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KUALA LUMPUR: The ringgit opened slightly higher on Tuesday, driven by mild demand for the domestic note and the weakening of the greenback due to lower US Treasury yields, analysts said.
At 9am, the ringgit rose to 4.7360/4.7405 versus the greenback from Monday’s close of 4.7380/4.7405.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the US dollar was fairly stable with the US Dollar Index (DXY) falling as low as 104.876 points but later rebounding to 105.194 points.
“This happened despite equity markets continuing to rally on Monday with the US Treasury yields remaining low last night,” he told Bernama.
He said the 10-year US Treasury note yielded 4.49%, one basis point lower compared to Friday’s closing.
“The Richmond US Federal Reserve (Fed) president Tom Barkin indicated he is optimistic that the restrictive monetary policy would bring the inflation rate towards the Fed’s 2% goal.
“It appears that hope for a US rate cut has been rejuvenated since the release of weaker-than-expected nonfarm payrolls (NFP),” he added.
It was reported that the NFP came in at 175,000 in April against consensus estimates of 238,000 and was lower compared to 315,000 in the prior month.
Meanwhile, wage growth is also cooling with average hourly earnings growing 3.9% in April from 4.4% at the start of the year.
“On that note, the ringgit should be well supported as the Fed seems to be on track to ease its monetary policy this year,” Afzanizam said.
At the opening, the ringgit traded higher against a basket of major currencies.
It rose versus the Japanese yen to 3.0755/3.0788 from Monday’s close of 3.0806/3.0825, went up vis-a-vis the British pound to 5.9522/5.9579 from 5.9604/5.9635 yesterday, and appreciated against the euro to 5.1026/5.1074 from 5.1033/5.1060.
The local note traded mixed against Asean currencies.
The ringgit traded higher versus the Philippine peso to 8.27/8.29 from 8.28/8.29 on Monday and gained against the Singapore dollar to 3.5068/3.5104 from 3.5086/3.5107 yesterday.
However, it fell against the Thai baht to 12.8951/12.9120 from 12.8950/12.9070 and slipped vis-a-vis the Indonesian rupiah to 295.4/295.9 from 295.6/295.9 previously. - FMT

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