Malaysian Ringgit Opens Slightly Higher On Expectations Of Lower US CPI Data

KUALA LUMPUR, July 11 (Bernama) -- The ringgit opened marginally higher against the US dollar as the greenback continued to trend lower due to markets’ expectation of a lower United States (US) Consumer Price Index (CPI) print set to be released tomorrow.

At 9.05 am, the local note was traded at 4.6605/6650 against the greenback compared with 4.6685/6725 at Monday’s close. 

Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said consensus estimates the US headline and core CPI to record slower increases in June at 3.1 per cent (May: 4.0 per cent) and 5.0 per cent (May: 5.3 per cent), respectively. 

He noted that the US dollar index declined to 101.94 points while the 10-year US Treasury note yield eased to 3.99 per cent after hovering over 4.00 per cent in the past two days.

Furthermore, indicators from China were also not forthcoming with the inflation rate flat at 0.0 per cent in June after rising 0.2 per cent in the preceding month.

China’s authorities have also announced measures to support the real estate sector by allowing a one-year loan extension for ailing property developers. 

“In that sense, the MYR/USD is expected to remain weak as the global outlook remains highly uncertain.

“While the ringgit may weaken in the near term, the latest fund flow in the bond markets showed that foreign investors continued to remain as net buyers at RM5.2 billion in June, higher from RM3.0 billion in the prior month,” he told Bernama. 

In the first six months of 2023 (1H2023), foreign funds have been net buyers at RM21.2 billion, as opposed to being net sellers of RM3.2 billion in 1H2022.

Foreign investors were seen accumulating Malaysian Government Securities (MGS), Government Investment Issue (GII) and Malaysia Islamic Treasury Bills (MITB) amounting to RM13.4 billion, RM9.1 billion and RM2.4 billion, respectively.

“As such, it’s not all gloom and doom for the ringgit as foreign investors continue to favour Malaysia’s bond market.

“Perhaps, they see a possible appreciation of ringgit on the horizon and the prospect of lower interest rates going forward,” said Mohd Afzanizam. 

Meanwhile, the ringgit traded lower against a basket of major currencies.

It fell vis-a-vis the euro to 5.1307/1357 from 5.1176/1220 on Monday’s close, slipped against the Japanese yen to 3.2985/3020 from 3.2761/2792 yesterday and weakened against the British pound to 5.9981/6.0039 from 5.9785/9836 previously.

The local note was also traded mostly lower against other Asean currencies.

The ringgit eased versus the Singapore dollar to 3.4692/4728 from Monday’s close of 3.4612/4644, weakened against the Thai baht to 13.3214/3400 from 13.2790/2961 yesterday and was marginally lower against the Philippines’ peso at 8.39/8.40 from 8.38/8.39 previously.

However, the ringgit improved against the Indonesian rupiah to 306.4/306.9 from 306.9/307.4 yesterday.

-- BERNAMA