The ringgit continued to strengthen against the US dollar at the opening today, driven by the tariff shock that is expected to have a negative impact on the US economy.
At 10.20am, the ringgit was at 4.2000, up 0.66% against the US dollar from its close of 4.2285 at the close of trading last week.
Bank Muamalat Malaysia Bhd chief economist Dr Afzanizam Rashid said the recent tax cut law passed by the US House of Representatives was expected to widen the fiscal deficit and increase the level of government debt.
The sovereign rating downgrade by Moody’s Ratings, which occurred before the law was passed, had pushed US Treasury yields higher, with the 30-year bond above 5.0%, making borrowing more expensive.
He added that the market was now at a critical juncture, as the US dollar, traditionally seen as a safe haven, was being reassessed. Therefore, the ringgit was expected to remain positive given the weakness of the US dollar for now.
At the open, the ringgit traded higher against a basket of major currencies and Asean currencies.
It appreciated against the British pound to 5.7016/5.7436 from 5.7072/5.7153 at Friday's close, rose against the euro to 4.7918/4.8271 from 4.7985/4.8053, and rose against the Japanese yen to 2.9490/2.9709 from 2.9502/2.9546.
Against regional peers, the ringgit rose against the Singapore dollar to 3.2775/3.3022 from 3.2891/3.2940 last Friday, and strengthened against the Thai baht to 12.9173/13.0252 from 12.9744/13.0012 previously.
The local currency also rose against the Philippine peso to 7.61/7.68 from 7.65/7.66, and rose against the Indonesian rupiah to 259.6/261.5 from 260.7/261.1 previously.
