The ringgit opened almost unchanged against the US dollar on Tuesday as investors remained cautious amid the ongoing conflict in West Asia, which continued to push crude oil prices higher and support the greenback.
At 8am, the local currency edged up to 4.0420/0480 against the US dollar from Monday’s close of 4.0440/0485.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the continued conflict could keep US inflation above the Federal Reserve’s two per cent target for an extended period.
“In that sense, talks of a US interest rate hike next week are gaining momentum against a backdrop of strong non-farm payrolls (NFP) outturn last week,” he told Bernama.
He said the agreement between Iran and Oman to manage shipping through the Straits of Hormuz, which is now at the final stage, suggested the conflict with the US could continue for some time.
A prolonged conflict, he said, could drive crude oil prices higher due to continued disruptions to oil supplies from the Gulf region, which accounts for about 20 per cent of global oil supplies.
“However, we do see the ringgit will maintain its tight range posture as the positive macroeconomic backdrop domestically provides the compelling reason to stay long in Malaysian financial assets.
“Hence, the US dollar-ringgit could range between RM4.04 and RM4.05 today,” he said.
Meanwhile, Quintex Intel global strategist Stephen Innes said a stronger US Consumer Price Index (CPI) reading could strengthen expectations of a US Federal Reserve interest rate hike in September, providing short-term support for the US dollar.
“A number of analysts have started leaning more aggressively in that direction, although markets are still essentially pricing the September decision as a coin toss,” he said.
Against other major currencies, the ringgit traded mostly lower.
It weakened against the Japanese yen to 2.6272/6313 from Monday’s 2.6173/6204, while slipping against the euro to 4.7000/7070 from 4.6991/7044.
The local currency also eased against the British pound to 5.4753/4834 from 5.4736/479 previously.
However, the ringgit strengthened against most regional currencies.
It rose against the Thai baht to 12.2995/3246 from 12.3041/3231, edged higher against the Philippine peso to 6.45/6.47 from 6.46/6.47, and gained slightly against the Indonesian rupiah to 229.1/229.5 from 229.2/229.6.
The ringgit was marginally weaker against the Singapore dollar at 3.1945/1997 compared with 3.1943/1981 previously.
