Ringgit slides further against US dollar in early trade

Ringgit slides further against US dollar in early trade

KUALA LUMPUR: The ringgit slid further against the US dollar in early trade today on the back of a potential interest rate hike in the United States (US), said an analyst.

At 9.09am, the local note fell to 4.3045/3080 versus the greenback from yesterday’s close of 4.2875/2910.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the ringgit would continue to remain weak ahead of the Federal Open Market Committee (FOMC) meeting on May 3 and 4.

“The problem that we see at the moment is that we are being bombarded with multiple views coming from US Federal Reserve officials. Some may prefer aggressive hikes while some would go for a steeper cut in balance sheet reduction.

“This plethora of views have clouded the market judgment which resulted in the yield curve inversion in early April which then has resuscitated the idea of the impending recession on the horizon,” he told Bernama.

Mohd Afzanizam said in a nutshell, there was excessive risk aversion at the moment which would result in higher safe-haven currencies.

“Until the excessive uncertainties are calmed, we will continue to see a weaker ringgit in the near term,” he added.

Meanwhile, SPI Asset Management managing partner Stephen Innes said there was no shortage of hawkish central bank speakers overnight with US Federal Reserve chairman Jerome Powell cementing 50 basis point (bp) hikes in May and June.

“But San Francisco Federal Reserve president Mary Daly mentioned the possibility of 75bp hikes. We are seeing a third 50bp hike now fully priced in for the Fed’s July meeting. We should expect 75bp pricing now creeping into May and June,” he told Bernama.

Innes said the US 10-year bond yield approaching 3.0 per cent was very negative for the ringgit, especially with China’s economic engine sputters.

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

The local note eased versus the Japanese yen to 3.3488/3517 from yesterday’s close of 3.3478/3508 yesterday but increased against the euro to 4.6665/6703 from 4.6794/6832.

It depreciated against the Singapore dollar to 3.1542/1570 from yesterday’s close of 3.1496/1524 and decreased vis-a-vis the British pound to 5.6070/6116 from 5.6003/6049. ― Bernama