The ringgit opened stronger against the US dollar on Friday, supported by improved market sentiment after Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) unchanged at 2.75%.
At 8am, the local currency was trading at 4.0370/0420 against the greenback, improving from Thursday’s close of 4.0405/0445.
BNM’s Monetary Policy Committee (MPC) decided on Thursday to maintain the OPR at 2.75%, a move that analysts said could provide further support for the ringgit.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the decision to maintain the rate amid strong economic growth and relatively stable inflation suggested Malaysia’s economy was in a “sweet spot”.
“This should provide support to the ringgit as BNM has policy flexibility, which can be a selling point for holding more ringgit,” he told Bernama.
The ringgit also benefited from a weaker US dollar following comments by US Federal Reserve Governor Christopher Waller, which reduced expectations of a rate hike at the Fed’s September meeting.
Mohd Afzanizam said Waller indicated he would support keeping interest rates unchanged if inflation continued to ease towards the Fed’s 2% target.
“This US dollar weakness is broadly supportive of emerging market currencies, including the ringgit,” he said.
Against other major currencies, however, the ringgit weakened against the Japanese yen, trading at 2.5936/5970 compared with 2.5838/5865 previously.
It also slipped against the British pound to 5.4608/4676 from 5.4539/4593, while it eased against the euro to 4.6942/7000 from 4.6894/6940.
The local currency also traded mostly lower against several regional currencies.
It weakened against the Singapore dollar to 3.1868/1910 from 3.1850/1884 and fell against the Thai baht to 12.2668/2898 from 12.2421/2598.
The ringgit was little changed against the Philippine peso at 6.46/6.47, while it strengthened against the Indonesian rupiah to 228.3/228.7 from 228.5/228.8 previously.
