KUALA LUMPUR, Dec 20 — The ringgit closed firmer against the US dollar on Wednesday following the United States Federal Reserve (Fed) expectation of easing its monetary policy next year.
At 6pm, the ringgit rose to 4.6555/6605 against the greenback from Tuesday’s close of 4.6760/6805.
SPI Asset Management managing partner Stephen Innes said it was a strong day for the ringgit in line with the Group of 10 (G10) currencies, particularly the Japanese yen, which quickly recovered from the Bank of Japan-induced selloff yesterday.
He said the primary catalyst is the expectation for Fed interest rate cuts with the main focus on the US personal consumption expenditure (PCE) data on Friday.
“If an upside surprise fails to materialise, it could counter the Fed’s attempt to push back on March rate cuts.
“In such a scenario, we could see the ringgit strengthen significantly and potentially extend the rally into the New Year testing the 4.60 level,” Innes sajd.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the People’s Bank of China has kept its loan prime rate unchanged at 3.45 per cent to keep its accommodative monetary stance to support the economy.
He said global monetary easing could be the main theme next year and this could help raise the value of emerging market currencies including the ringgit.
“The local currency has breached its immediate support level of RM4.6611 against the US dollar and the next support level would be RM4.5778.”
In the meantime, the ringgit was traded mostly lower versus a basket of major currencies.
It appreciated against the British pound to 5.9027/9090 from 5.9376/9433 at Tuesday’s close.
However, the local currency was lower against the Japanese yen at 3.2465/2502 from 3.2358/2393 and fell vis-a-vis the euro to 5.1043/1098 from 5.1146/1195.
The local note was traded mostly higher against other ASEAN currencies.
It was flat against the Philippine peso at 8.35/8.36 from 8.35/8.37 from yesterday’s closing but strengthened against the Indonesian rupiah to 300.1/300.5 from 301.5/301.9.
The ringgit went up versus the Singapore dollar to 3.5027/5968 from 3.5089/5128 and improved against the Thai baht at 13.3392/3596 from 13.3604/3805 previously.
— Bernama
