KUALA LUMPUR (March 21): The ringgit opened higher against US dollar on Thursday after the US Federal Open Market Committee (FOMC) opted to keep the federal funds rate (FFR) steady at 5.50%, which further strengthened the local note.

At 9am, the ringgit had risen to 4.7070/7105 against the greenback, from Wednesday’s close at 4.7335/7400.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the FOMC decision suggested that both US businesses and consumers are facing challenges in meeting their debt obligations, potentially leading to a deterioration in their repayment patterns if not addressed promptly.

“Consequently, a cut in the FFR is warranted and that could weaken the US dollar. This could bolster the value of the ringgit.

“With this in mind, we are reiterating our forecast for the US dollar-to-ringgit exchange rate to reach 4.50 by the end of the year,” he told Bernama.

Mohd Afzanizam explained that the FOMC carried sentiments from the prior meeting, as the committee reiterated its view of the economy's robust growth trajectory, coupled with a gradual easing of inflation rates that, albeit reduced, persisted above the targeted 2% threshold.

“A focal point of significance in this meeting lies in the Federal Reserve (Fed) dot plot, illustrating the range of FFR projections among Fed members. Notably, the latest projections suggest a more cautious stance,” he added.

Mohd Afzanizam emphasised that FOMC members continue to exercise caution regarding inflation risks, while maintaining a resolute stance on potential rate adjustments this year.

Meanwhile, the ringgit was easier against a basket of major currencies.

It slipped vis-a-vis the Japanese yen to 3.1261/1287 from 3.1207/1252 on Wednesday, and declined versus the euro to 5.1466/1505 from 5.1306/1377 previously. It slid against the British pound to 6.0226/0271 from 6.0082/0165.

The ringgit was traded mostly higher against other Asean currencies, with the local note up against the Singapore dollar to 3.5169/5198 from Wednesday’s 3.5204/5255, appreciated vis-a-vis the Philippine peso to 8.40/8.42 from Wednesday’s 8.43/8.45 previously, and was stronger against the Indonesian rupiah at 299.3/299.6 from 301.0/301.5.

But it was easier versus the Thai baht at 13.0997/1146, from 13.0821/1048 at Wednesday’s close.