According to an analyst, risk sentiment continued to be influenced by expectations of a Federal Reserve interest rate cut in March of next year, which led to the ringgit opening somewhat higher against the US dollar on Wednesday.
The ringgit strengthened versus the US dollar from yesterday’s close of 4.6340/6435 to 4.6315/6380 at 9:05 a.m.
The expectation of a rate drop, according to managing director of SPI Asset Management Stephen Innes, is increasing the value of risky assets, as evidenced by the US S&P 500 index’s slow but steady ascent to a record high.
“Within the G10 group of currencies, this development is contributing to a weaker US dollar and fostering a positive global sentiment,” he said in an interview with Bernama.
According to Innes, the ringgit is expected to appreciate domestically, mainly because of its relationship with the Chinese yuan, which is gaining from October’s policy stimulus measures implemented by the Chinese government.
“In the coming year, strong domestic exports are anticipated to be driven by commodities and chips connected to artificial intelligence (AI). Because local ringgit demand is largely driven by export earnings from currency conversion, the ringgit is therefore expected to gain,” he continued.
The ringgit generally lost value in relation to a major currency basket.
At yesterday’s end, it was up versus the Japanese yen to 3.2463/2511 from 3.2517/2586.
But the local currency dropped against the British pound on Tuesday, from 5.8815/8935 to 5.8913/8995, and against the euro, from 5.1044/1148 to 5.1109/1180.
In relation to other Asian currencies, the local note was primarily traded higher.
The ringgit strengthened against the Philippine peso to 8.35/8.37 from 8.37/8.39, versus the Singapore dollar to 3.4986/5038 from 3.5005/5082 at yesterday’s close, and against the Indonesian rupiah to 299.0/299.6 from 299.2/300.0.
It did, however, fall against the Thai baht on Tuesday, going from 13.3962/4310 to 13.4207/4466.
