Ringgit closes marginally higher against US dollar

KUALA LUMPUR, Dec 14 — The ringgit closed marginally higher against the US dollar today in capitalising on the greenback’s weakness, amid market participants’ negative reaction to a US interest rates increase, a dealer said.

At 6pm, the local unit was quoted at 4.0830/0860 against the US dollar from 4.0850/0880 on Wednesday.

The Federal Reserve (Fed) at its meeting raised the benchmark interest rate by 25 basis points on Wednesday to a target range of 1.25-1.5 per cent.

OANDA Head of Trading Asia-Pacific, Stephen Innes told Bernama, the Fed’s move was no surprise as it is holding on to a transitory inflation narrative.

“But, given the recent tepid wage growth, it’s getting more difficult for the market to digest it, even more so after a softer core consumer price index print today.

“Perhaps, more significant for near-term dollar direction, the Fed believes the tax package will have little impact on growth or productivity, which has sent the nascent tax reform dollar bulls packing,” he added.

He said the bond market has been cautious of this all along, and struck a chord again with bond desks, as 10-year US Treasury bonds fell to 2.35 per cent, sending the dollar spiralling downward.

Meanwhile, FXTM Chief Market Strategist Hussein Sayed said longer term growth expectations were left unchanged at 1.8 per cent, suggesting that US tax reforms will only have limited impact on the economy.

He also said it won’t be until March 2018 that market participants obtain additional guidance from the Fed, which will be led by the new Chair, Jerome Powell.

Meanwhile, the ringgit traded lower against a basket of other currencies.

The local note weakened against the Singapore dollar to 3.0294/0321 from 3.0190/0219, yesterday and depreciated against the yen to 3.6200/6233 from 3.6017/6053.

The ringgit declined against the euro to 4.8253/8305 from 4.7991/8038 yesterday and traded lower against the pound at 5.4929/4985 from 5.4518/4579. — Bernama