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Ringgit drops against greenback ahead of monetary policy meetings

Ringgit drops against greenback ahead of monetary policy meetings

KUALA LUMPUR: The ringgit fell against the US dollar at the opening bell today, as traders await the outcome from the United States Federal Reserve (US Fed) and Bank of England (BoE) meetings this week to decide their next course of action.

At 9 am, the local note slipped by 135 basis points (bps) to 4.1835/1885 from 4.1700/1730 at last Friday’s close.

Furthermore, Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the focus would be on the US Fed’s asset purchases programme to see whether the US Fed would announce plans to reduce the size of its monthly purchases which currently stands at US$120 billion.

“On top of that, the market would be watching the latest economic projection by the US Fed to see whether there are any upgrades in its assessment compared to June,” he told Bernama.

He said during the June meeting, the US Fed has revised the US gross domestic product (GDP) projection upwards from 6.5 per cent to seven per cent for 2021.

“Similarly, the US Fed had raised its inflation forecast from 2.4 per cent to 3.4 per cent,” he said.

As such, Mohd Afzanizam expects the ringgit to lean on the weaker side today.

Meanwhile, Kenanga Research said the ringgit’s direction this week would mainly be influenced by the US and China central bank policy meetings.

“Ringgit’s sell-off is likely to continue if there is another upward revision in the US Fed’s Summary of Economic Projections and if the People’s Bank of China (PBOC) unleash more liquidity into the market,” it said.

Against a basket of major currencies, the ringgit opened mostly higher, except against the yen, where it fell to 3.8025/8074 from 3.7913/7943 at last Friday’s close.

The local note appreciated versus the British pound to 5.7419/7487 from 5.7483/7525 last week, appreciated vis-a-vis the Singapore dollar to 3.0982/1021 from 3.0985/1010 and climbed to 4.9043/9102 versus the euro from 4.9135/9170 previously. – Bernama

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