KUALA LUMPUR (Jan 31): The ringgit slipped in early trade on Tuesday (Jan 31) as the greenback gained strength ahead of the US Federal Reserve (Fed) meeting this week on interest rates.
At 9.05am, the ringgit stood at 4.2450/2500 against the greenback compared with 4.2410/2460 at Monday’s close.
SPI Asset Management managing partner Stephen Innes said although most market participants anticipate that the Fed will slow its pace of tightening to a 25-basis-point rate hike, a “great debate” has continued on whether the American central bank will signal that there is a long way to go in the rate upcycle.
This, he said, has dampened sentiment with investors “unwilling to fix their wagons to bulls” ahead of the US meeting.
“Risky assets, like the ringgit, have benefited greatly from the China reopening theme and a drop in US inflation but concerns the Fed may not play ball and keep rates higher despite falling US inflation has traders reducing some risks.
“We are hitting the upper band of my weekly ranges, where I expected exporters to sell at the 4.2475-4.2500 level. I don't think the market will move above 4.2525 after the positive holiday data from China over the Lunar New Year holiday,” he told Bernama.
The US central bank meeting will take place from Tuesday until Wednesday. Bank of England and European Central Bank meetings are scheduled on Feb 2.
At home, the ringgit traded higher against a basket of major currencies.
The local note appreciated against the Singapore dollar to 3.2306/2346 from 3.2315/2358 on Monday and rose vis-a-vis the British pound to 5.2472/2534 from 5.2571/2633.
It strengthened versus the euro to 4.6071/6125 from 4.6257/6311 and improved against the Japanese yen at 3.2584/2627 from 3.2638/2679 at the end of Monday.