KUALA LUMPUR: The ringgit slid further against the US dollar at the opening due to increased demand for the greenback as the US Federal Reserve (Fed) reaffirmed its commitment to keep inflation under control, sustaining the expectation of substantial interest rate hikes by the American central bank.
At 9.10 am, the local currency slid to 4.5030/5055 against the greenback from 4.5010/5045 at Monday’s close.
ActivTrades trader Dyogenes Rodrigues Diniz said the greenback has continued to rise against the ringgit, which is now trading above the 4.50 level.
Fed chairman Jerome Powell has said he believes that the economic tightening will have few social consequences for the least well-off.
“Overall, this statement reiterates the Fed’s current position on a more restrictive monetary policy. This position should be maintained for some time as employment data points to a strong job market and inflation remains high,” Diniz said.
He said the main effect of a systematic increase in the interest rate in the US, is that it makes public debt securities increasingly appealing to investors.
“If you add to this the fact that the US bonds are considered the safest in the world, this tends to create a constant flow of capital from other countries to the US, capital that gets converted from other currencies into US dollars, pushing the US currency higher against its counterparties,” he added.
Against a basket of major currencies, the ringgit was traded lower.
The local unit decreased against the Singapore dollar to 3.2263/2286 from Monday’s close of 3.2224/2251 and fell against the British pound at 5.2658/2687 from 5.2549/2590 previously.
It eased against the euro to 4.5638/5663 from 4.5636/5671 and depreciated against the Japanese yen to 3.1596/1615 from 3.1526/1553. – Bernama