Ringgit opens lower versus greenback in early session

KUALA LUMPUR (May 12): The ringgit opened lower against the US dollar in the early session on Friday (May 12) as the greenback stayed firmer following the release of the US producer price index (PPI).

At 9am, the local note fell to 4.4735/4790 versus the US dollar from Thursday’s closing rate of 4.4615/4665.

ActivTrades trader Dyogenes Rodrigues said as the PPI measures inflation at the beginning of the production chain, it is used as a way to gauge final consumer inflation, which in turn is measured by the consumer price index.

“Today's (Friday) reading showed inflation at +0.2% for April, which could end up increasing overall inflation in the coming months.

“With higher inflation, investors anticipate the need for the US Federal Reserve to raise interest rates in the near future to contain the rise in prices, and this in turn, tends to boost the US dollar," he told Bernama.

Meanwhile, Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said the April US PPI was recorded at 2.3% after a 2.7% gain in March, while the core PPI stood at 3.2% from 3.4% previously.

“It is a similar trend with the CPI, which suggests that a disinflationary trend has become prevalent.

“The risk-off mode is obvious, therefore, the US dollar and ringgit (USD/MYR) pair might stay elevated above the RM4.46 level as demand for the US dollar is firming,” he said.

He added that Malaysia’s first quarter of 2023 gross domestic product announcement on Friday would also be closely watched for clues on market direction.

“We are projecting a 5.5% growth with domestic demand being the key driver," he said.

Meanwhile, the ringgit was traded mostly lower against a basket of major currencies.

It depreciated against the euro to 4.8851/8911 from 4.8751/8805 at the close on Thursday and went down against the Japanese yen to 3.3250/3294 from 3.3122/3161 on Thursday, but was higher vis-a-vis the British pound at 5.5990/6059 versus 5.6161/6224 previously.

At the same time, the local note traded mixed against Asean currencies.

It improved vis-a-vis the Thai baht to 13.2176/2413 from 13.2283/2482 at Thursday’s close, declined versus the Indonesian rupiah to 303.8/304.4 from 302.9/303.5 and slipped to 3.3608/3651 against the Singapore dollar compared with 3.3588/3628 previously.

The local note was flat against the Philippines’ pesos at 8.00/8.02 from 8.00/8.01 on Thursday.