Ringgit snaps seven-day losing streak as market enters correction mode

At 6pm, the local note stood at 4.3545/3570 versus the greenback from yesterday’s close of 4.3560/3580. — Reuters pic
At 6pm, the local note stood at 4.3545/3570 versus the greenback from yesterday’s close of 4.3560/3580. — Reuters pic

KUALA LUMPUR, April 26 — The ringgit snapped its seven-day losing streak to rebound slightly today as the market entered correction mode.

However, overall momentum remained fragile due to mounting fears over global growth after mass Covid-19 testing in China triggered worries over possible lockdown in Beijing, said Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid.

In addition, the US dollar continued to rally and hit its highest level in two years yesterday on expectations that the Federal Reserve (Fed) would have to lift interest rates aggressively to tame inflation.

At 6pm, the local note stood at 4.3545/3570 versus the greenback from yesterday’s close of 4.3560/3580.

Mohd Afzanizam said the currency market would have to endure this period of uncertainty until the deliberation by the Federal Open Market Committee (FOMC) next week.

“The focus remains on the US FOMC meeting next week, with a 50-basis point rate hike almost a given.

“Apart from that, the Fed is also expected to announce its balance sheet reduction plan. It needs to remove the excess liquidity in the system as the economy has been recovering quite consistently,” he told Bernama.

ActivTrades trader Dyogenes Rodrigues Diniz said the next resistance point for the US dollar versus the ringgit was seen at 4.3650 and the price was expected to reach that level by tomorrow or Thursday.

“Still, it is possible that the buying force for the greenback will start to lose strength only when it reaches the region of 4.4450, which was the high hit in 2017,” he said.

Meanwhile, the Singapore dollar continued to hover at a record-high level against the ringgit after the Monetary Authority of Singapore decided recently to allow further appreciation of the currency’s nominal effective exchange rate as a signal of the tightening of its monetary policy.

Overall, the ringgit was traded mixed against a basket of major currencies.

The local note slid versus the Japanese yen to 3.4065/4087 from yesterday’s close of 3.3968/3986 and stood at 3.1697/1720 against the Singapore dollar compared with 3.1698/1718 previously.

It rose against the euro to 4.6532/6559 from 4.6740/6761 yesterday and increased vis-a-vis the British pound to 5.5359/5391 from 5.5426/5451. — Bernama