KUALA LUMPUR: The ringgit opened lower against the US dollar today as the greenback strengthened following higher United States (US) Treasury yields, said analysts.
At 9 am, the local note slipped to 4.5520/5555 against the greenback from 4.5400/5465 at Thursday’s close.
“The US dollar is trading firmer across the board due to lower-than-expected US jobless claims that pushed US yields higher, increasing the chance of an additional US Federal Reserve (Fed) rate hike beyond July.
“As markets anticipate less growth but more easing in China, this could weaken the Chinese yuan and drag the ringgit down given the close correlation of the local unit and the Chinese yuan,” SPI Asset Management managing director Stephen Innes told Bernama.
Meanwhile, the ringgit was traded higher against a basket of major currencies.
It improved vis-a-vis the euro to 5.0696/0735 from 5.0902/0975 yesterday, rose against the British pound to 5.8612/8657 from 5.8630/8714 and gained versus the Japanese yen to 3.2519/2546 from 3.2540/2589 previously.
At the same time, the local note traded mixed against other Asean currencies.
The ringgit eased vis-a-vis the Philippines’ peso to 8.33/8.35 from 8.32/8.34 on Thursday but increased versus the Singapore dollar to 3.4311/4342 from 3.4324/4378 previously.
It rose against the Thai baht to 13.2847/3019 from 13.3525/3780 but slid against the Indonesian rupiah to 303.7/304.1 from 302.9/303.5 on Thursday.
US dollar gains
The US dollar strengthened on Thursday as the US jobless claims report showed a decline in initial claims, Xinhua reported.
The dollar index, which measures the greenback against six major peers, rose 0.59 per cent to 100.8764 in late trading, reaching the highest level in a week.
US initial jobless claims fell by 9,000 from the previous week to 228,000 for the week ending July 15, the US Bureau of Labour Statistics reported Thursday.
The four-week moving average of claims, which evens out some of the weekly volatility, fell by 9,250 to 237,500.
The US jobless claims report continued to reflect a tight labour market, which may contribute to the performance of the US dollar ahead of the Federal Open Market Committee (FOMC) meeting next week.
The benchmark US 10-year Treasury yield rose on Thursday by more than 11.5 basis points to 3.855 per cent after the report.
“The market has been searching for signs of layoffs in the US and they simply aren’t materialising,” said Adam Button, chief currency analyst at ForexLive in Toronto.
“Today’s initial jobless claims number underscores again that the US has an extremely strong labour market and that the Fed still has more work to do,” he said.
Meanwhile, the existing home sales in the US declined 3.3 per cent in June to an adjusted annual rate of 4.16 million, the National Association of Realtors (NAR) reported on Thursday.
In late New York trading, the euro was down to US$1.1126 from US$1.1202 in the previous session, and the British pound fell to US$1.2858 from US$1.2929 in the previous session.
The US dollar bought 140.1930 Japanese yen, higher than 139.6080 Japanese yen of the previous session. The US dollar rose to 0.8671 Swiss francs from 0.8587 Swiss francs, and it increased to 1.3178 Canadian dollars from 1.3160 Canadian dollars. The US dollar climbed to 10.3550 Swedish Krona from 10.2645 Swedish Krona.
Short-term rates to 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 RM37.65 billion in the conventional system and RM29.24 billion in Islamic funds.
Today, the central bank will conduct a RM1 billion conventional money market tender for seven days, and a RM1 billion Qard tender for seven days .
It will also call for two reverse repo tenders, namely a RM1.5 billion tender for 31 days and a RM500 million tender for 94 days.
It 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, BNM will conduct up to RM38.7 billion conventional overnight tender and RM28.2 billion Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.5520/5555
100 yen 3.2519/2546
1 pound 5.8612/8657
1 euro 5.0696/0735
1 SGD 3.4311/4342
100 baht 13.2847/3019
1 mln rupiah 303.7/304.1
100 pesos 8.33/8.35
Gold up
The physical price of gold as at 9.30 am stood at RM279.33 per gramme, down RM1.07 from RM280.40 at 5 pm yesterday. – BERNAMA
