Ringgit opens marginally higher versus US dollar on China's reopening theme

KUALA LUMPUR: The ringgit opened marginally higher against the US dollar today with China's reopening theme still resonating in Malaysia's capital markets and triggering some catch-up in other Asia foreign exchange (FX), analysts said.

At 9 am, the local note improved to 4.5915/5965 against the US dollar from Monday's close of 4.5925/5980.

SPI Asset Management managing director Stephen Innes said, however, that overnight in New York, traders seemed to pump the brakes a little on the dollar sell-off after last week's United States (US) consumer price Index madness.

"Given the numerous fits and starts in China's reopening amid surging Omicron cases, whether such a positive outlook holds or not remains to be seen, although foreign buying in Chinese equities does auger well for the Malaysian market, which is deeply depressed

"The ringgit is expected to trade a tad more defensively today on the back of hawkish Federal Reserve speak overnight, but it all comes down to the flight of the Chinese yuan. If the yuan pushes towards reopening jubilation, I expect the ringgit to coattail the move stronger," he told Bernama.

ActivTrades, trader Dyogenes Rodrigues Diniz said the US dollar lost over three per cent against the ringgit since last week.

The bearish move comes as a natural market reaction after the prolonged bullish move of the US currency, which had been gaining ground pretty relentlessly since December 2020, he noted.

"From a technical point of view, the US dollar was in an extremely overbought region and testing its highest level since 1998. Over the next few days, it is possible that the greenback will rebound and rise against the ringgit to 4.6300 before resuming its downward movement," he added.

Meanwhile, the ringgit traded higher against a basket of major currencies, except against the Singapore dollar.

It rose vis-a-vis the Japanese yen to 3.2708/2746 from 3.2738/2782 on Monday and strengthened against the euro to 4.7375/7427 from 4.7381/7438 yesterday.

The local currency appreciated versus the British pound to 5.3932/3990 from 5.4187/4252 at Monday's close but eased against the Singapore dollar to 3.3446/3488 from 3.3405/3450 previously.

-- BERNAMA