KUALA LUMPUR, Sept 23 — The ringgit opened higher against the United States (US) dollar on Tuesday, extending gains as market confidence was lifted by the government’s firm policy stance following the rationalisation of RON95 subsidies.
At 8am, the local note strengthened to 4.1885/2085 against the greenback from Monday’s close of 4.1945/2040.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the RON95 subsidy rationalisation showed the authorities were taking a pragmatic approach to uphold fiscal discipline.
“At the same time, efforts are being made to ensure the risk of higher living costs does not erode consumers’ purchasing power. In some sense, it can be deemed credit-positive as the measure allows the technology embedded in MyKad to be fully utilised as part of policy tools.
“Perhaps there will be more fine-tuning on how subsidies can be further rationalised, focusing on income levels. On that note, such a move can be constructive for the ringgit in the mid to long term,” he told Bernama.
Yesterday, Prime Minister Datuk Seri Anwar Ibrahim announced that the price of RON95 would be reduced to RM1.99 per litre from RM2.05 through targeted subsidies under the BUDI Madani RON95 (BUDI95) programme, effective September 30.
Afzanizam also noted that the US Dollar Index (US DXY) fell 0.31 per cent to 97.34 points amid mixed views among US Federal Reserve (US Fed) officials on interest rates.
“Atlanta US Fed President Raphael Bostic, St. Louis US Fed President Alberto Musalem, and Cleveland US Fed President Beth Hammack were in the hawkish camp.
“Meanwhile, US Fed board member Stephen Miran, who voted for a 50 basis point cut at the last Federal Open Market Committee meeting, said the neutral rate is at 2.0 per cent, suggesting the current monetary policy stance is highly restrictive,” he said.
Meanwhile, SPI Asset Management managing director Stephen Innes said the government’s RON95 fuel subsidy, providing 300 litres per month to all Malaysians regardless of income, had effectively increased household disposable income.
“With less money spent on fuel, consumers have more to spend elsewhere, offering additional support to the local economy. This, combined with global US dollar weakness, positions the ringgit to continue trading on a favourable trajectory today,” he said.
At the opening, the ringgit was mostly higher against a basket of major currencies.
It rose to 2.8352/8488 against the Japanese yen from 2.8364/8430 at Monday’s close, firmed to 5.6595/6865 versus the British pound from 5.6630/6758, but eased to 4.9420/9656 against the euro from 4.9390/9502.
The local note was also firmer against Asean currencies.
It advanced to 3.2672/2830 versus the Singapore dollar from 3.2688/2764, appreciated to 13.1822/2518 against the Thai baht from 13.1890/2243, edged up to 7.34/7.38 against the Philippine peso from 7.35/7.37, and was little changed at 252.1/253.4 against the Indonesian rupiah from 252.5/253.1.
