The ringgit opened higher against the US dollar as investors are now assessing the tension between the United States (US) and Venezuela.
Demand for the US dollar is seen as short-lived as current geopolitical risks are still seen as under control.
At 10:19 am, the ringgit opened at 4.0550, strengthening by 0.37% against the US dollar since opening early Tuesday trading in the Asian session.
Director of Investment Strategy and National Economist of IPPFA Sdn Bhd, Mohd Sedek Jantan explained that capital flows have shifted back to emerging market currencies and high-performing assets as risk sentiment begins to stabilize.
He also noted that the strengthening of the ringgit was supported by a rebound in the Asian Dollar Index which reflects investor interest in emerging market currencies in line with increased risk tolerance.
Meanwhile, the US Dollar Index (DXY) declined 0.17% to 98.26 by the end of trading, but remains slightly higher for the period so far this year.
At the open, the ringgit traded lower against major currencies.
It weakened against the Japanese yen to 2.5958/6020 from 2.5932/5965 yesterday, declined against the British pound to 5.5012/5140 and depreciated against the euro to 4.7626/7737 from 4.7540/7598 previously.
The ringgit also traded higher against ASEAN currencies.
It rose slightly against the Indonesian rupiah to 242.8/243.5 from 243.0/243.5, rose against the Philippine peso to 6.87/6.90 from 6.88/6.90 and strengthened against the Thai baht to 12.9773/13.0167 from 12.9891/13.0109.
However, it declined against the Singapore dollar to 3.1686/1763 from 3.1603/1644 previously.
