Ringgit Plummets! Unable to Hold at 4.55 Against the US Dollar!

An analyst noted that the Malaysian ringgit opened with a slight decline against the US dollar, which was bolstered by expectations of rising US bond yields. Afzanizam Rashid, Chief Economist at Bank Muamalat Malaysia Bhd, pointed out that the latest statements from US Treasury Secretary Janet Yellen underscored the potential catastrophic impact of the impasse over the debt ceiling on the economy.

Afzanizam highlighted the possibility of credit risks for the US government escalating, which could result in an increase in bond yields. This, in turn, would contribute to a prevailing sense of caution and weaker sentiment in the foreign exchange (FX) market. Consequently, investors may increasingly turn to the US dollar as a safe haven to safeguard against heightened volatility.

Additionally, Afzanizam observed that the US Dollar Index (DXY) remained at a high level, with the US dollar-ringgit exchange rate breaking through the immediate resistance level of 4.5491 yesterday.

Based on technical analysis, the next significant hurdle for the US dollar-ringgit exchange rate is anticipated at 4.6257, according to Afzanizam.

However, considering the oversold position of the ringgit, Afzanizam expects the US dollar-ringgit pair to remain within a narrow range around 4.5500. He believes that a potential resolution to the US debt ceiling impasse could lead to a compromise, influencing the stability of the exchange rate.

As of 9.04am, the ringgit was trading at 4.5475/5520 against the US dollar, slightly stronger compared to the previous day's closing rate of 4.5470/5515.

In contrast, the ringgit demonstrated relative strength against a basket of major currencies.

The ringgit demonstrated strength against the British pound, with the exchange rate improving to 5.6548/6604 from 5.6578/6634 on Monday. Similarly, it gained ground against the euro, reaching 4.9154/9203 compared to 4.9189/9238 previously. Additionally, the ringgit appreciated against the Japanese yen, standing at 3.2810/2845 versus 3.2973/3008 yesterday.

Conversely, the performance of the ringgit against other ASEAN currencies was mixed. It remained unchanged against the Indonesian rupiah at 305.3/305.8 from Monday's closing rate. However, it strengthened against the Singapore dollar, reaching 3.3773/3811 from 3.3799/3835. Furthermore, the ringgit gained ground against the Thai baht, standing at 13.1835/2019 compared to 13.1950/2138.

On the other hand, the ringgit experienced a slight decline against the Philippine peso, with the exchange rate at 8.16/8.17 compared to 8.14/8.16 from Monday's close.