Ringgit opens lower on increasing demand for the greenback

KUALA LUMPUR: The ringgit opened lower against the US dollar on Friday as the latest US gross domestic product (GDP) figures showed that the US economy grew by 2.5 percent in 2023, a significant improvement from the 1.9 per cent growth recorded in 2022, thus increasing demand for the US dollar.

At 9:05 am, the ringgit depreciated to 4.7360/7400 against the greenback compared to Wednesday’s close of 4.7280/7350.

SPI Asset Management managing director Stephen Innes said while one may assume the robust performance of the US economy would strengthen the US dollar, its overall impact on the market may not be substantial once the initial excitement settles.

“The foreign exchange (FX) market primarily focuses on critical price data, particularly in anticipation of upcoming releases such as the December core US Personal Consumption Expenditures (PCE) deflator on Jan 26, 2024 and the January Consumer Price Index (CPI), which is expected to be released on February 13, 2024.

“Anticipations for the December core PCE deflator remain restrained, with an expected 0.2 per cent month-on-month increase, aligning with the Federal Reserve’s prioritisation of inflation metrics,” he told Bernama.

Additionally, Innes explained that the release of the January CPI figure in early February introduces further event risk into the market.

Meanwhile, the ringgit was traded mostly higher against a basket of major currencies.

It appreciated vis-a-vis against the British pound to 6.0166/0217 from 6.0343/0433 and advanced versus the euro to 5.1343/1386 from 5.1540/1616 at Wednesday’s close.

It slid against the Japanese yen to 3.2091/2120 from 3.2043/2093, previously.

However, the local note was traded higher against Asean currencies.

It rose against the Singapore dollar at 3.5322/5355 from 3.5331/5386 and was higher versus the Thai baht to 13.2379/2576 from 13.2493/2745 at Wednesday’s close.

The local note also was stronger against the Philippine peso to 8.38/8.39 from 8.39/8.41 and strengthened against the Indonesian rupiah to 299.2/299.6 from 300.9/301.4, previously. – Bernama