The ringgit opened higher against the US dollar today after recovering from yesterday's sharp decline, as market sentiment remained cautious following the latest policy decision by the US Federal Reserve (Fed).
At 10:30am, the ringgit was at RM4.1230, up 0.19% since it opened early Friday in Asian trading.
Bank Muamalat Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid said the US Dollar Index (DXY) remained high at 100.85 points following the Federal Open Market Committee (FOMC) decision, with investors now focusing on the Fed's interest rate outlook.
According to him, the market seemed to be focused on the Fed staff's outlook which indicated that the US central bank is likely to raise the federal funds rate by 25 basis points this year.
However, risk appetite in the global equity market improved following reports of a peace deal between the US and Iran, which could potentially reopen the Strait of Hormuz.
He said the development could help ease concerns about global oil supply disruptions, potentially lowering crude oil prices and reducing inflationary pressures globally.
Essentially, the situation signals that pressure on central banks to tighten monetary policy may be easing.
However, the lack of clear guidance in the FOMC statement has led the market to adopt a more conservative approach.
Yesterday, the ringgit fell 1.29 percent against the US dollar, but he was of the view that the decline was somewhat excessive compared to other regional currencies and the ringgit is expected to stabilize after experiencing a sharp decline.
At the opening of trade, the ringgit strengthened against several major currencies.
The ringgit rose against the Japanese yen to 2.5504/5564 from 2.5588/5620, strengthened against the euro to 4.7135/7244 from 4.7222/7280, and rose against the British pound to 5.4304/4429 from 5.4476/4542.
Against regional currencies, the ringgit also performed better, except against the Philippine peso which was little changed at 6.79/6.81 from 6.79/6.80 previously.
The ringgit also strengthened against the Thai baht to 12.5435/5801 from 12.5611/5809, rose against the Indonesian rupiah to 231.1/231.7 from 231.2/231.5, and rose against the Singapore dollar to 3.1874/1950 from 3.1898/1939.
