Ringgit rebounds vs US dollar in early trade

KUALA LUMPUR: The ringgit opened slightly higher against the US dollar this morning amidst cautious market sentiment with a potential gradual US tariff hike and the upcoming release of the US Producer Price Index (PPI) and Consumer Price Index (CPI) later this week.

At 8 am, the ringgit traded at 4.4925/5050 against the greenback versus 4.5080/5120 at yesterday’s close.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US Dollar Index (DXY) remained elevated at 109.956 points after hitting 110.163 points last night, the highest since November 2022 when the Fed was raising policy rates to curb inflation.

US President-elect Donald Trump’s economic team is reportedly considering a gradual tariff increase of two per cent to five per cent per month under the International Emergency Economic Powers Act.

This approach aims to boost negotiating leverage while minimising inflation risks.

“ Against such a backdrop, the ringgit would remain in the tight range from RM4.50 to RM4.51.

“This week’s data on the US PPI and CPI would be another reason for the market to stay vigilant as consensus is pencilling headline PPI to come in at 3.4 per cent in December 2024 from 3.0 per cent previously,” he told Bernama.

Mohd Afzanizam also pointed out that the CPI would be higher at 2.9 per cent in December against the preceding month’s 2.7 per cent.

“The US Federal Reserve (Fed) will likely keep Fed Fund Rate unchanged in the Jan 28-29 Federal Open Market Committee meeting.

Meanwhile, the ringgit opened mostly lower against major currencies.

It strengthened versus the Japanese yen to 2.8555/8636 from yesterday’s close of 2.8706/8733, but it fell vis-a-vis the euro to 4.6107/6235 from 4.5964/6004 and weakened against the British pound to 5.4943/5096 from Monday’s close of 5.4592/4640.

The local note was traded mixed against ASEAN currencies.

The ringgit advanced further versus the Philippines’ peso to 7.65/7.68 from 7.68/7.69 and was higher vis-a-vis the Indonesian rupiah at 275.8/276.8 from 276.8/277.2 recorded at yesterday’s closing.

It declined versus the Thai baht to 12.9486/9947 from 12.9440/9618 and was down against the Singapore dollar to 3.2830/2926 compared with 3.2788/2822 at yesterday’s close.