KUALA LUMPUR: The ringgit was slightly lower against the US dollar at Friday's closing, although sentiment towards the local currency remains favourable, as Bank Negara Malaysia (BNM) has said firmly that the ringgit is undervalued.
At 6 pm, the ringgit fell to 4.7440/7480 against the greenback compared with Thursday's close of 4.7400/7455.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said BNM’s statement gives a clear indication that the value of Malaysian currency has been off-tangent from its fundamental value.
"It signifies potential upside for the ringgit and the fact that the ringgit might be experiencing some correction as it has been in the oversold condition for quite some time from the technical standpoint,” he told Bernama.
Mohd Afzanizam said the local note appreciated against the US dollar today, with the US Dollar Index (DXY) falling 0.13 per cent to 103.838 points.
"This happens as the market awaits the personal consumption expenditures (PCE) inflation report tonight,” he added.
For the week just ended, the stronger performance of the ringgit against the US dollar was aided by the latest United States (US) PCE price index, suggesting that the inflation rate is on track to achieve the two per cent target, with January’s index moderated to 2.4 per cent from 2.6 per cent in the prior month.
The US also released its initial jobless claims data, which was higher than expected (215,000 against a 209,000 consensus forecast) - a move that tends to be negative for the dollar.
Another indicator favouring the ringgit against the US dollar was the US Chicago purchasing managers’ index (PMI) for February, which came lower than expected (at a 44 actual against a 48.1 forecast).
Meanwhile, the ringgit was traded higher against a basket of major currencies.
The local currency breached the 6.000-level against the British pound and closed higher at 5.9926/9977 from 6.0042/0111 yesterday, strengthened versus the euro to 5.1330/1373 from 5.1434/1493 previously, and strengthened vis-a-vis the Japanese yen to 3.1492/1521 from 3.1642/1681 at Thursday’s close.
The ringgit was mixed against other Asean currencies.
It edged up versus the Thai baht to 13.1928/2120 from 13.2140/2345 on Thursday’s close and was up against the Singapore dollar at 3.5229/5264 from 3.5257/5301 previously.
The local note was down versus the Philippine peso to 8.47/8.48 from 8.43/8.44 yesterday and slipped vis-a-vis the Indonesian rupiah to 302.1/302.4 from 301.5/302.0. - Bernama
