BERNAMA – The ringgit is the clear winner from the 50 basis points (bps) cut to the United States (US) federal funds rate (FFR), as it continued its appreciation against the greenback, said an analyst.
At 6pm, the local note appreciated to 4.2005/2070 versus the greenback from Thursday’s close of 4.2025/2105.
Within six months, the ringgit rose 12.67 per cent against the US dollar. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the gap between the FFR and the overnight policy rate (OPR) is likely to narrow, which bodes well for the ringgit as investment returns from ringgit-denominated assets will become increasingly appealing.
“True enough, the ringgit-US dollar has pierced its immediate support level of MYR4.2128 and presently, the immediate support level is located at MYR4.0728.
“Hence, we will see the ringgit making another attempt to reach a new groundbreaking level next week,” he told Bernama.
Moving forward, markets will be monitoring key data points, namely the US Personal Consumption Expenditure (PCE) inflation, which was published yesterday along with the University of Michigan Consumer Sentiment Index (CSI).
The sentiment index rates the relative level of current and future economic conditions.
“Markets were receptive with the half-point cut by the Federal Reserve and it seems the United States economy is in for a soft landing, alleviating recession fears,” Mohd Afzanizam said yesterday. Meanwhile, the ringgit was traded mostly higher against a basket of major currencies.
It gained versus the euro to 4.6878/6950 from Thursday’s closing of 4.6976/7065, strengthened vis-a-vis the Japanese yen to 2.9182/9229 from 2.9442/95008, but marginally fell against the British pound to 5.5841/5928 from yesterday’s close of 5.5822/5928.
The local note traded mixed against ASEAN currencies.
