Ringgit moderately higher amid firmer crude oil prices

Ringgit moderately higher amid firmer crude oil prices
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KUALA LUMPUR (Sept 7): The ringgit opened moderately higher against the US dollar today in line with crude oil prices that had moved into positive territory at the time of writing.

However, as for the broader outlook, cautious mode still clouded investors’ sentiment after Saudi Arabia cut crude contract prices for Asia, coupled with the US Federal Reserve’s (Fed) upcoming announcement on its tapering of asset purchases.

Meanwhile, back home, Bank Negara Malaysia (BNM) is scheduled to hold its fifth monetary policy meeting on Thursday.

At 9.03am today, the local note had inched up to 4.1445/1485 from 4.1465/1490 at yesterday’s close.

In its note today, AmBank Research said that it believes the financial markets would be able to absorb the Fed’s tapering without much volatility.

“Any concern will only come about should there be persistent market unrest that spills into the real economy.

“Market fears will arise if the Fed’s direction with regard to the unwinding of its US$120 billion worth of monthly bond purchases remains unclear — whether by following the post-Great Recession playbook, that is to first cut back Treasury purchases or mortgage-backed securities to calm a red-hot housing market," it said.

The research house, nevertheless, cautioned about the mid-term outlook for the ringgit, saying it is expected to come under slight downward pressure driven by, among others, the downgrade of the 2021 gross domestic product (GDP) growth forecast due to the rise in Covid-19 cases, the government's plan to widen the budget deficit and the domestic political noises pending the 15th general election (GE15).

At the opening bell, the local note was traded mostly lower against a basket of major currencies.

It fell against the Singapore dollar to 3.0895/0927 from 3.0875/0896 yesterday, slipped versus the yen to 3.7756/7796 from 3.7730/7753 and eased vis-a-vis the euro to 4.9241/9282 from 4.9186/9215.

However, the local currency improved to 5.7397/7446 against the British pound from 5.7404/7435 at yesterday’s close.