Kuala Lumpur: The ringgit opened slightly higher against the US dollar in early trade as the dollar retreated, sparked by a report hinting at gradual tariff implementations and data showing an unexpected dip in US wholesale inflation, said an analyst. At 8 am, the ringgit traded at 4.5000/5080 against the greenback versus 4.5035/5100 at yesterday’s close.
According to BERNAMA News Agency, SPI Asset Management managing partner Stephen Innes said the dollar retreated from its lofty perch, marking its first decline in six sessions. A strategic report hinting at gradual tariff implementations and fresh data showcasing an unexpected dip in US wholesale inflation contributed to a recalibration of extended long-dollar positions at unseen levels since 2019. Innes noted that the crowded trade makes the dollar extremely sensitive to downside economic surprises.
US President-elect Donald Trump’s economic team is reportedly considering a gradual tariff increase of two per cent to five per cent per month under the Inter
national Emergency Economic Powers Act. Innes said investors are cautious on Wednesday’s critical US consumer price inflation report, as forecasts suggest an uneasy three per cent December inflation rate, but when annualised, hint at rates edging towards four per cent. This preview contrasts with the US Federal Reserve’s late 2024 projections, affecting rate cut hopes and increasing treasury yields towards five per cent, indicating a volatile financial landscape.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the ringgit could remain around RM4.50 to RM4.51 until there is more clarity on global policy direction. He noted that the US dollar is expected to perform positively in the near term as market expectations shift from lower rate cuts to no change in the policy rate.
The US Dollar Index (DXY) continued to trend lower to 109.273 points since the news of a possible measured pace of US tariff hike broke out. The latest US Producer Price Index (PPI) print still sho
ws an elevated inflation rate, with December’s PPI accelerating to 3.3 per cent from 3.0 per cent in the prior month, while the core PPI sustained at 3.5 per cent for the second consecutive month.
Mohd Afzanizam also noted that uncertainties over the incoming administration in the White House contribute to market uneasiness, resulting in a growing appetite for the US dollar. Meanwhile, the ringgit opened mixed against major currencies, strengthening against the Japanese yen but weakening against the euro and the British pound.
The local note also traded mixed against ASEAN currencies, advancing versus the Philippines’ peso and the Indonesian rupiah but declining against the Thai baht and the Singapore dollar.