KUALA LUMPUR: The ringgit opened higher against the US dollar on Wednesday ahead of an expected interest rate cut later today in the United States.
However, the market is expected to remain cautious on stronger US retail sales data, which would boost demand for the greenback.
At 8 am, the ringgit advanced to 4.4550/4700 against the US dollar from Tuesday's close of 4.4645/4690.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the market tone remains cautious as US retail sales accelerated in November, growing 0.7 per cent month-on-month (m-o-m) from 0.5 per cent in the preceeding month, beating expectations.
"The US Dollar Index (DXY) continued to stay elevated at 106.956 points as US data points demonstrated the resillience of the American economy after its retail sales accelerated in November.
"Non-retail sales, which is a reflection of online shopping, rose 1.8 per cent m-o-m in November and accounted for 17.5 per cent of total retail sales, indicating that the appetite for spending among the US citizens was strong,” he told Bernama.
On that note, Mohd Afzanizam said the US Federal Reserve (Fed) might sound hawkish with its forward guidance when its two-day meeting ends later today. "As such, the ringgit is likely to stay weak as the US dollar remain highly in demand,” he added.
Markets expect the Fed to deliver a 25-basis-point interest rate cut at the end of its two-day policy meeting today.
The ringgit traded stronger against other major currencies.
It went up versus the British pound to 5.6619/6809 from 5.6646/6703, improved against the euro to 4.6751/6908 from 4.6815/686, and rose against the Japanese yen to 2.9008/9109 from 2.9028/9059 previously.
The ringgit traded mostly higher against ASEAN currencies.
It strengthened against the Singapore dollar to 3.3002/3116 from Tuesday’s 3.3048/3087, improved further against the Indonesian rupiah to 276.6/277.7 from yesterday’s 277.2/277.6 and continued its climb vis-à-vis the Philippine peso, trading at 7.56/7.59 from Tuesday’s 7.58/7.59.
However, it slipped versus the Thai baht to 13.0259/0805 from 13.0236/0440. - Bernama
