The ringgit opened higher this morning against the US dollar and most other major currencies, driven by market cautious sentiment over the escalating geopolitical tensions in the Middle East involving the US and Iran.
At 10am, the local currency rose to 4.2770 against the US dollar from its closing level of 4.2505 last Friday.
Bank Muamalat Malaysia Bhd Chief Economist Mohd Afzanizam Abdul Rashid said the market was now monitoring the possibility of an escalation of the conflict following the announcement of US air strikes on three Iranian nuclear sites which were described as “successful”.
However, he explained that despite the ringgit opening higher, pressure on the local currency’s value may remain in the near term, following the increase in the US Dollar Index (DXY) to 98.937 points which is an indication of a ‘risk-off’ mode among global traders.
At the opening, the ringgit also recorded a stronger performance against most major and regional currencies.
It strengthened against the Japanese yen to 2.9023/2.9186 from 2.9245/2.9289 at the previous close, rose against the British pound to 5.7000/5.7316 from 5.7356/5.7437, and rose against the euro to 4.8800/4.9070 from 4.9000/4.9069.
The ringgit also traded higher against ASEAN currencies, including the Singapore dollar to 3.2948/3.3133 from 3.3088/3.3140, the Thai baht to 12.9243/13.0042 from 12.9727/12.9969, the Indonesian rupiah to 258.6/260.2 from 259.2/259.7, and the Philippine peso to 7.42/7.46 from 7.43/7.45.
Commenting further, Mohd Afzanizam said investors' focus was now increasingly on the possible impact on global crude oil prices and market risk sentiment, following concerns over Iran's response and the potential use of the Strait of Hormuz as a strategic pressure tool in the escalating conflict.
