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Ringgit rises to near three-month high versus US$

KUALA LUMPUR: After US Federal Reserve Chairman Jerome Powell indicated a cut in interest rates, the ringgit rose to 4.1217 against the US dollar on Thursday.

As of 12.30pm, the ringgit increased from 0.34% to 4.1230 – the highest since April 16.

It is reported that Federal Reserve prepares for cutting the interest rates for the first time in a decade due to a cooling global economy with no signs of overheating in the jobs market at home.

Based on an earlier report, more investors had shifted interest away from the safe haven due to concerns on the global economic outlook.

Ambank research says, the question remains whether the US Federal Reserve will cut its policy rate by 25bps or 50bps.

Meanwhile, China’s authorities may embark on more aggressive stimulus as June factory gate data pointed towards a deflationary trend.

However, Ambank foresees more ‘offbalance sheet’ fiscal support to sustain growth and implement financing tools like reserve requirement ratio cuts to support small and private firms.

“Room for two 50 bps cut in reserve requirement ratio to take place in 3Q and 4Q is on our cards,” it said. The research house expects the ringgit to trade between its support level of 4.1128 and 4.1216 while its resistance is pinned at 4.1344 and 4.1388.

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