KUALA LUMPUR: Lower inflation data that signalled the possibility of a devaluation of the US dollar sent the ringgit into retreat mode this morning.
Three minutes from the start of the day, the local note had already declined to 4.3955/4.4050 against the US dollar, compared with 4.3900/4.3955 at the close yesterday.
ActivTrades Trader Dyogenes Rodrigues Diniz said although the inflation data was lower than expected, the US Federal Reserve’s (Fed) decision on interest rate — which could see it rise to 4.5% from 4% now — was in line with expectations.
The US Fed’s statement, he said, pointed to a scenario of tight monetary policy well into 2023.
“Based on this, it is possible that the ringgit will register an upward correction over the next few days,” he added.
“The interest rate is the most important element in determining the price of money that circulates in an economy because it determines how much the government will remunerate public debt securities,” he said in a note today.
Meanwhile, the ringgit was traded mostly lower against a basket of major currencies.
The local note weakened against the British pound to 5.4575/5.4692 from 5.4440/5.4509 at yesterday’s close and eased versus the euro to 4.6909/4.7010 from 4.6819/4.6878 yesterday.
However, it improved against the Japanese yen to 3.2456/3.2531 from 3.2552/3.2608 at the close yesterday and inched up versus the Singapore dollar to 3.2610/3.2688 from 3.2627/3.2675 previously.
