KUALA LUMPUR – The ringgit was higher against the US dollar at the opening on Tuesday, lifted by buying support for the local currency, while the greenback is weakening through the global risk-on channel as foreign exchange traders sell the dollar and put more money to work outside of the US.
This ensued from the sinking US dollar to an almost two-week low versus a basket of its peers, moving in tandem with retreating Treasury yields from recent peaks despite signs of a robust US economic recovery.
The dollar index declined to its lowest level since March 25, slipping further in early Asian trading following a 0.4 per cent decline on Monday.
At 9.04am, the local unit stood at 4.1330/1370 versus the US dollar from 4.1400/1450 at Monday’s close.
Commenting on the performance of the ringgit today, Axi chief global market strategist Stephen Innes said the broadly weaker US dollar should help provide support to the local note for the time being, but cautioned the volatile crude oil prices may be a concern for traders.
As Malaysia is one of the crude oil-exporting country, the movement on the crude oil prices would influence the ringgit.
“More critical for the ringgit is how markets reprice expectations on the US Federal Reserve‘s (Fed) normalisation and how US bond yield react. With The US 10-year Treasury yields drifting lower on Monday as stocks hit record highs on the back of robust economic data, it could be a bit of an offsetting factor for the local unit,” he said.
During normalisation, the Fed intends to move the federal funds rate into the target range set by the Federal Open Market Committee primarily by adjusting the interest rate it pays on excess reserve balances.
Meanwhile, the ringgit was trader lower against a basket of emerging currencies.
It fell against the Singapore dollar to 3.0832/0864 from 3.0776/ 0825 and depreciated versus the yen to 3.7481/7520 from 3.7422/7477.
Vis-a-vis the British pound, the ringgit slipped to 5.7469/7520 from 5.7360/7437 and down to 4.8827/8891 from 4.8604/8671 compared with the euro.