Kuala Lumpur: The ringgit opened higher for the fourth consecutive day against the US dollar as investors reassessed their positions following the release of weaker US economic data, said an analyst. At 8 am, the ringgit traded at 4.4900/5050 against the greenback versus 4.5005/5050 at Thursday's close.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid noted that the market remains mixed as prospects for elevated inflation levels are visible. This outlook is influenced by measures expected from the incoming United States administration, which are perceived as potentially inflationary.
Dr. Mohd Afzanizam highlighted that the US Dollar Index continues to slide, reaching 108.957 points, while the 10-year US Treasury yield fell by four basis points to 4.61 percent. This suggests that market participants expect the US Federal Reserve to maintain its monetary easing bias. Supporting this view, US December's retail sales were reported at 0.4 percent month-on-month, falling short of the consensus estimate of 0.6 percent.
Additionally, Dr. Mohd Afzanizam pointed out that initial jobless claims were higher than expected, with 217,000 claims last week compared to the consensus target of 210,000. He also mentioned that Scott Bessent, the US Treasury Secretary nominee, favors making the 2017 tax cut measures permanent, potentially leading to strong demand and causing the ringgit to remain in a tight range in the near term.
Meanwhile, SPI Asset Management managing partner Stephen Innes stated that the release of softer inflation data from the United Kingdom and the US provided some relief, indicating that market fears may have been initially overstated. He noted that the latest consumer price index figures from these countries suggest that underlying inflationary pressures are easing, which could encourage both the Bank of England and the Fed to continue their rate-cutting agendas this year.
Adding to global uncertainties, Innes observed that the strengthening Japanese yen is driven by expectations of a Bank of Japan rate hike, possibly as soon as next week. A sharp decline in global bond yields has narrowed yield differentials with Japan, making yen assets more attractive. This shift follows a turbulent start to the year for global bond markets, where fears of escalating inflation were prevalent.
The ringgit also opened higher against major and ASEAN currencies. It strengthened against the euro to 4.6247/6402, rose against the Japanese yen to 2.8889/8990, but weakened against the British pound to 5.4926/5110. The local note advanced against the Singapore dollar to 3.2841/2955, rose against the Philippine peso to 7.66/7.69, and appreciated against the Indonesian rupiah to 274.1/275.2. However, it depreciated versus the Thai baht to 12.9795/13.0315.