Ringgit retreats slightly as US dollar strengthens

KUALA LUMPUR: The ringgit reversed from yesterday's gains to open slightly lower against the US dollar amid stronger sentiment for the greenback as traders remained cautious ahead of Bank Negara Malaysia's (BNM) two-day monetary policy committee (MPC) meeting starting tomorrow.

At 9 am, the ringgit depreciated to 4.3195/3235 against the greenback from Monday's close of 4.3150/3200.

ActivTrades trader Dyogenes Rodrigues Diniz said, however, Malaysia's economy has consistently shown good numbers and this has attracted the attention of investors looking for opportunities in Southeast Asia.

The unemployment rate in Malaysia has been decreasing in recent months (3.6 per cent) and so has inflation (4 per cent).

Driven by the restrictive monetary policy adopted by the US Federal Reserve in recent months, the ringgit has weakened to its worst level against the greenback since 1998, at 4.7475.

"Due to the cyclical nature of the market, the recent bullish move allowed a strong retracement which could bring the ringgit to the 4.000 region over the next few months," he said.

Back home, the market expects BNM's MPC to continue raising the overnight policy rate by another 25 basis points to 3.0 per cent at this week's meeting.

Meanwhile, the ringgit traded lower against a basket of major currencies.

The local unit fell to 5.2685/2734 against the British pound from 5.2643/2704 at Monday's close, slipped against the Singapore dollar at 3.2701/2736 from 3.2677/2720.

It was lower versus the euro to 4.6767/6811 from 4.6693/6747 and weakened vis-a-vis the Japanese yen to 3.3638/3672 from 3.3616/3658 at Monday's close.

-- BERNAMA