KUALA LUMPUR, The ringgit continued to trade higher against the US dollar at the close on Thursday amid the increasing prospect of interest rate cuts in the United States (US), said an analyst.

At 6 pm, the ringgit was traded higher at 4.6855/6895 versus the US dollar from Wednesday’s close of 4.6985/7010.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the expectations of a lower US interest rate has also bolstered the risk appetite among market participants, leading to regional currency appreciation against the greenback, namely the Thai baht, Indonesian rupiah, Philippine peso and the Singapore dollar.

Meanwhile, the Bank Negara Malaysia’s (BNM) Monetary Policy Committee has also kept the Overnight Policy Rate (OPR) steady at 3.00 per cent and showed no inclination to ease its policy rate.

This is an indication that the wide interest rate differential between the Fed Funds Rate and OPR would be narrowed when the US Federal Reserve (Fed) would commence its rate cut decisio
n in September, he said.

‘However, the path for the ringgit appreciation is not going to be linear. It could hit the speed bump especially when Fed officials are still hawkish in their stance,’ said Mohd Afzanizam to Bernama.

Against a basket of major currencies, the ringgit were traded mostly higher.

The local note appreciated against the Japanese yen to 2.9003/9030 from Wednesday’s close of 2.9075/9092 and rose vis-a-vis the euro to 5.0819/0862 from 5.0828/0855 yesterday, but declined to 6.0335/0387 against the British pound from 6.0174/0206 previously.

However, the ringgit traded mixed versus its ASEAN peers.

It edged up versus the Singapore dollar to 3.4774/4807 from 3.4817/4838 yesterday and improved vis-a-vis the Philippine peso to 8.03/8.05 from 8.05/8.07 previously.

The local note however eased to 12.9184/9341 against the Thai baht from 12.9062/9184 on Wednesday and was flat against the Indonesian rupiah at 289.2/289.7 from 289.2/289.6 at yesterday’s close.

Source: BERNAMA News Agency