KUALA LUMPUR: The ringgit opened higher against the US dollar this morning on weaker manufacturing purchasing managers index (PMI) flash estimates for advanced economies, said an analyst.
At 9 am, the local note rose to 4.6410/6455 against the greenback from 4.6575/6610 at Wednesday’s close.
The latest manufacturing PMI prints for the United States (US), Europe and the United Kingdom (UK) remained below the 50-point demarcation line at 47.0, 43.7 and 42.7 points, respectively.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said businesses need to contend with the rising cost of borrowing and wage pressures, particularly those in advanced economies.
“The US dollar index (DXY) was down by 0.14 per cent to 103.419 points with major currencies such as euro, pound and yen strengthening against the greenback.
“Having said that, we expect USD/MYR to move in a tight range of between RM4.65 and RM4.66 today as market participants are wary about the US rate outlook ahead of the Jackson Hole Symposium this week,” he told Bernama.
US Federal Reserve chair Jerome Powell’s speech during the symposium on Friday is expected to provide clues on the US’ future monetary policy decision, said Mohd Afzanizam.
In the meantime, the ringgit was traded lower against a basket of major currencies.
The local note declined against the Japanese yen to 3.2051/2084 from 3.2026/2052 at yesterday’s close, weakened versus the euro to 5.0443/0492 from 5.0348/0385 and edged down against the British pound to 5.9029/9086 from 5.8880/8924 previously.
At the same time, the local note traded mixed against other Asean currencies.
It was lower against the Singapore dollar to 3.4322/4358 from 3.4309/4340 and depreciated vis-a-vis the Thai baht to 13.3171/3361 from 13.2813/2970 at Wednesday’s close.
Meanwhile, the ringgit appreciated against the Indonesian rupiah to 303.3/303.8 from 304.4/304.8 yesterday and increased against the Philippines’ peso to 8.20/8.21 from 8.21/8.22 on Wednesday.
US dollar falls
The US dollar lost in late trading on Wednesday, as S&P manufacturing purchasing managers’ index (PMI) showed that business activity in the US private sector was at a softening pace in early August, reported Xinhua.
The dollar index, which measures the greenback against six major peers, fell 0.14 per cent to 103.4197 in late trading.
S&P Global said on Wednesday that its flash US Composite PMI index, which tracks manufacturing and service sectors, fell to a reading of 50.4 in August from 52 in July, the biggest drop since November 2022.
“A near-stalling of business activity in August raises doubts over the strength of US economic growth in the third quarter,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Wednesday’s cool reading may be viewed positively by the Federal Reserve, which is keen to see activity cool to lower inflation. The US dollar came under pressure and erased its daily gains after the PMI data.
PMI of the eurozone retreated to 47 in August, compared to 48.6 in July, which was published earlier. The services sector PMI index fell from 50.9 in July to 45.2 in August, the first time it has dipped below 50 this year.
In late New York trading, the euro increased to US$1.0858 from US$1.0852 in the previous session, and the British pound was down to US$1.2716 from US$1.2738.
The US dollar bought 144.7830 Japanese yen, lower than 145.8630 Japanese yen of the previous session. The US dollar was down to 0.8778 Swiss francs from 0.8800 Swiss francs, and it fell to 1.3542 Canadian dollars from 1.3552 Canadian dollars. The US dollar fell to 10.9193 Swedish Krona from 10.9374 Swedish Krona.
Short-terms rates remain stable
Short-term rates are expected to remain stable today on Bank Negara Malaysia’s (BNM) operations to absorb surplus liquidity from the financial system.
Liquidity is estimated at RM45.19 billion in the conventional system and RM22.86 billion in Islamic funds.
Today, the central bank will conduct a RM1 billion conventional money market tender for eight days and two RM500 million Qard tenders, each one for eight days and 14 days, respectively.
It will also conduct two reverse repo tenders, comprising a RM1.5 billion tender for 32 days and a RM500 million tender for 92 days.
BNM also announced the opening of a RM4 billion Bank Negara Interbank Bills Islamic (BNIBI) tender for 32 days, to be issued on Aug 28, 2023.
The central bank also announced the availability of reverse repo, sale and buy-back agreements, as well as Collateralised Commodity Murabahah facilities for tenors of one to three months.
At 4 pm, it will conduct up to RM46.2 billion conventional overnight tender and RM21.9 billion for Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6410/645
100 yen 3.2051/2084
1 pound 5.9029/908
1 euro 5.0443/0492
1 SGD 3.4322/4358
100 baht 13.3171/3361
1 mln rupiah 303.3/303.8
100 pesos 8.20/8.21
Gold up
The physical price of gold as at 9.30 am stood at RM276.93 per gramme, up RM1.16 from RM275.77 at 5 pm yesterday. – BERNAMA
