The ringgit opened almost unchanged against the US dollar as the market took a cautious approach ahead of the important decision of the Monetary Policy Committee (MPC) by Bank Negara Malaysia scheduled for May 7.
At 11am, the ringgit was trading at 3.9600, down 0.25% since it opened early Tuesday in the Asian session.
According to Bank Muamalat Chief Economist, Dr Mohd Afzanizam Abdul Rashid, the current market sentiment is not only influenced by domestic monetary policy, but also by global geopolitical developments.
The tensions that have erupted in the Persian Gulf between the United States and Iran are seen as having the potential to derail the ceasefire.
This situation has had a direct impact on global oil prices, with WTI crude oil jumping by 4.39% to $106.42 per barrel, while Brent oil rose 5.80% to $114.44 per barrel.
The sharp increase in oil prices has major implications for global inflation as higher energy costs will increase the prices of goods and services.
In this context, the ringgit is expected to face pressure to depreciate against the US dollar as investors tend to shift to safer assets as uncertainty increases.
Therefore, the direction of the ringgit in the near term is largely influenced by the development of conflicts in West Asia and expectations for global oil supplies.
Despite external pressures, the ringgit's performance actually showed strengthening against several major world currencies.
The ringgit rose against the Japanese yen to 2.5151/5184 from 2.5186/5210 previously, in addition to strengthening against the British pound to 5.3498/3565 from 5.3612/3660 and rose against the euro to 4.6230/6289 from 4.6329/6370.
Regionally, the ringgit also performed better as it rose against the Singapore dollar to 3.0963/1005 from 3.1019/1049, and strengthened against the Thai baht to 12.0740/0963 from 12.1460/1631.
The ringgit also showed a slight increase against the Indonesian rupiah to 227.3/227.6, while its position remained unchanged against the Philippine peso at 6.42/6.43.
