Ringgit opens lower against greenback following bullish FOMC valuation
KUALA LUMPUR (September 23): The ringgit fell further against the US dollar at the opening bell today, following the optimistic US Federal Reserve (Fed) conclusion at the Federal Open Market meeting Committee (FOMC) yesterday, which could lead to a possible hike in its key rate, an analyst said.
At 9 a.m., the local banknote had depreciated to 4.1925 / 1955 against 4.1910 / 1950 at yesterday’s close.
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the FOMC meeting ended with the Fed explicitly declaring its intention to cut back its asset purchase program soon.
“FOMC members believed that the US economy had made good progress towards achieving its dual policy goals, including maximum employment and price stability,” he said. Bernama.
More importantly, he said the Fed’s dot charts indicated that more participants expected higher interest rates next year, where the funds rate could be above 0.25% in 2022.
“The survey of Fed members was also in line with economic projections, as the US gross domestic product (GDP) forecast for 2022 was increased to 3.8% from 3.3% forecast in June.” , did he declare.
Mohd Afzanizam noted that the inflation rate projection has also been revised up until 2023, implying that the rate hike cycle will begin in 2022.
Therefore, the greenback is also strengthening against major currencies, he added.
âAs such, the ringgit could remain weaker today,â he said.
Likewise, ActivTrades trader Dyogenes Rodrigues Diniz said the scenario could drag the local rating over the next few days to the 4.2400 level, where it could encounter some selling pressure.
âApart from that, the Consumer Price Index (CPI), which is expected tomorrow, could bring some volatility to the market.
âIf the CPI is lower than expected, it could cause the ringgit to lose more value against the US dollar,â he said.
On opening, the ringgit was trading higher against a basket of major currencies.
The ringgit rose against the British pound at 5.7085 / 7126 from 5.7140 / 7195 at yesterday’s close, climbed against the Singapore dollar to 3.0948 / 0972 from 3.0996 / 1028, and appreciated to 4.8998 / 9033 against the euro of 4.9156 / 9203 yesterday.
The local rating also widened against the yen to 3.8162 / 8193 from 3.8270 / 8311 previously.