KUALA LUMPUR: The ringgit opened lower against the US dollar today as the greenback continued to strengthen its appeal as a safe-haven currency amidst the risk-off sentiment surrounding the market, analysts said.
At 9 am, the local currency slipped to 4.4220/4255 against the US dollar compared with 4.4185/4200 at the close on Tuesday.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the risk-off sentiments have become more prevalent with the 10-year United States (US) Treasury yield falling below the three per cent level as demand for safe-haven instruments strengthens.
"It appears that appetite for cash-like instruments is rising despite giving low returns, and that would mean the main focus now is to protect the principle of investment.
"The US dollar index (DXY) has surpassed 106 points at the moment as demand for the greenback has escalated. In that sense, dollar-ringgit should remain at the prevailing level of around RM4.41," he told Bernama.
He added that the focus will be on Bank Negara Malaysia’s Monetary Policy Committee’s decision on the Overnight Policy Rate today, noting that a 25 basis points hike would lend some support to the ringgit.
Meanwhile, ActivTrades trader, Dyogenes Rodrigues Diniz said the bullish US dollar movement is due to the uncertainties surrounding Russia's new offensive in Ukraine, which resulted in investors fleeing to safe-haven assets such as the greenback.,
"Investors are now keenly awaiting the release of the ADP Non-Farm employment change data -- due to be released on Wednesday -- to gauge the state of the US labour market. The final and most important data will come out on Friday with the release of the Non-Farm Payroll.
"The expectation is that 268,000 new jobs have been created,” he said.
He added that from the technical point of view, the US dollar/ringgit pair is getting closer to an important resistance region.
"If it manages to break below 4.4050, it could drop to 4.3860," he said.
Meanwhile, the ringgit was traded higher against a basket of major currencies, except the Singapore dollar.
The local currency had gained against the British pound at 5.2909/2951 against Tuesday’s close of 5.3168/3186 and rose vis-a-vis the euro to 4.5392/5428 from 4.5511/5526 yesterday.
However, it had eased against the Singapore dollar to 3.1487/1514 from 3.1486/1502 and weakened versus the Japanese yen to 3.2606/2636 from 3.2530/2543 on Tuesday. - Bernama