Ringgit opens weaker against US$ on slipping oil prices, global growth

KUALA LUMPUR: The ringgit opened slightly lower against the US dollar this morning on concerns over slowing global growth and weaker oil prices.

At 9.02am, the local note stood at 4.1080/1130 against the US dollar from 4.1070/1100 at yesterday’s close.

At the time of writing, Brent crude fell 0.21 per cent to US$66.34 per barrel.

A dealer said oil prices slipped after China posted its slowest quarterly economic growth in at least 27 years, reinforcing concerns about demand in the world’s largest crude oil importer.

Meanwhile, the greenback traded higher in thin trading as investors prepared for a possible Federal Reserve’s cut in the interest rate at its policy meeting next week.

“The market also will be waiting on the upcoming US retail sales and industrial production data, as well as the Fed’s key Beige Book on US economic conditions, publish within this week,” he added.

At the opening, the ringgit traded higher against other major currencies.

It rose against the Singapore dollar to 3.0282/0336 from 3.0285/0319 on Tuesday and was higher against the yen at 3.8055/8112 from 3.8074/8112.

It improved against the pound to 5.1399/1478 from 5.1580/1634 and appreciated against the euro at 4.6244/6312 from 4.6319/6365. – Bernama

Barring a significant sell-off in oil prices, the ringgit may be targeting 4.10 and lower to the US dollar given the support of a dovish US Federal Reserve and European Central Bank.

Head of Vanguard Markets research Stephen Innes said the local currency should benefit from the Fed’s pro-cyclical rate cut even more if its rate cut is revealed to be deeper at 50bps.

“I believe there is still a strong chance this could happen given the Fed has regimen shifted to global based monetary policy outlook,” he said in a note.

He added that even a lower rate cut of 25bps would be good for the emerging markets Asia carry and support a liquidity induced risk-on environment.

Source: TheStar