Ringgit up versus the dollar as US-Iran sanctions waiver and fiscal reforms drive gains

KUALA LUMPUR, June 23 — The ringgit opened higher against the US dollar on Tuesday as peace negotiations in West Asia made progress, an analyst said.

At 8 am, the local note improved to 4.1440/1505 against the greenback from 4.1465/1500 at yesterday’s close.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US government has allowed Iran to sell its oil in the international market, a sign that the ongoing peace negotiation was going well. “As a result, the WTI and Brent crude prices are hovering around US$74.29 and US$77.90 per barrel, respectively. Traders seem to be grappling with prospects for lower oil prices and lower inflation, but remain uncertain on the potential rate hike by the US Federal Reserve (Fed),” he told Bernama today.

Back home, Mohd Afzanizam said the latest move by the Ministry of Finance to rationalise diesel subsidies can be deemed credit-positive.  He said the new mechanism will leverage MyKad to distribute the diesel subsidies, which could result in RM2 billion in savings.  “It shows that the government is proactively responding to current challenges, but at the same time, it remains mindful of the impact on the rakyat. I suppose the ringgit should be fairly stable today,” he added.

At the opening, the ringgit was mixed against a basket of major and regional currencies.

It strengthened versus the euro to 4.7345/7419 from 4.7506/7547 at Monday’s close, but slipped against the British pound to 5.4887/4973 from 5.4850/4896 and was flat vis-a-vis the Japanese yen at 2.5648/5690 from 2.5635/5658.

Against ASEAN peers, the ringgit appreciated against the Singapore dollar to 3.2030/2085 from 3.2069/2098 at yesterday’s close, and rose versus the Thai baht to 12.5637/5899 from 12.5919/6075.

The ringgit was almost unchanged versus the Indonesian rupiah at 232.2/232.7 from 232.3/232.6 on Monday, and remained unchanged against the Philippine peso at 6.78/6.79 from yesterday’s close. — Bernama