The ringgit continued its strengthening momentum yesterday when it opened higher on Thursday, driven by expectations that the local currency has the potential to continue strengthening today.
At 11:30 am, the ringgit was trading at 3.9080, up 0.31% since it opened early Thursday in the Asian session.
Market consensus expects Bank Negara Malaysia (BNM) to maintain the Overnight Policy Rate (OPR) at 2.75 percent in its third Monetary Policy Committee (MPC) meeting this year.
Investors are now awaiting the central bank's latest assessment of Malaysia's inflation and economic growth prospects.
Bank Muamalat Malaysia Berhad Chief Economist Dr Mohd Afzanizam Abdul Rashid said the ringgit's performance was also supported by investors' increased risk appetite after the United States and Iran were expected to reach an agreement and reopen the Strait of Hormuz.
He explained that global market sentiment improved with the S&P 500 and Nasdaq indices jumping 1.46 percent and 2.02 percent respectively on the day to close at 7,365.12 points and 25,838.94 points.
At the same time, the US Treasury bond yields for two years and 10 years fell by eight basis points to 3.87 percent and 4.35 percent respectively.
The US Dollar Index (DXY) also fell 0.43 percent to 98.023 points, thus giving room for developing country currencies including the ringgit to strengthen.
According to him, if BNM maintains the OPR at 2.75 percent as expected, the ringgit has the potential to continue to rise with the US dollar-ringgit pair possibly moving closer to the RM3.90 level.
At the opening of trading, the ringgit was traded higher against several major world currencies.
The ringgit strengthened against the euro to 4.6058/6170 from 4.6189/6242 at Wednesday's close.
The local currency also rose against the British pound to 5.3280/3409 from 5.3443/3504 previously and strengthened against the Japanese yen to 2.5046/5109 from 2.5159/5191.
Against regional currencies, the ringgit also performed better.
It rose against the Singapore dollar to 3.0909/0986 from 3.0946/0986 and strengthened against the Thai baht to 12.1536/1898 from 12.1866/2074.
Meanwhile, the ringgit traded almost unchanged against the Indonesian rupiah at 225.4/226.1 compared to 225.6/225.9 previously, while against the Philippine peso it remained at 6.39/6.41.
