KUALA LUMPUR: The ringgit retreated against the US dollar today as investors reversed their long positions after Bank Negara Malaysia slashed its benchmark interest rate by 25 basis points (bps) amid a stronger greenback-sentiment, a dealer said.
The local note ended at 4.2045/2085 against the greenback from 4.2010/2040 recorded at 6pm yesterday.
AxiCorp chief market strategist Stephen Innes, in a note, said the central bank’s decision to cut its overnight policy rate (OPR) by 25 bps to 2.5% was within market expectations.
This was the second rate cut after the central bank surprisingly cut the benchmark rate by 25 bps during its first meeting for this year, on Jan 22.
From a growth perspective, Innes said the rate reduction would help the ringgit over the long run.
However, he said this would only be so until the economic environment improves in China, then the ringgit could be vulnerable to the Covid-19 malaise.
“Ultimately, this should play out favourably for the ringgit as the rate cut will provide a demand impulse across a multitude of high-ticket sectors,” he said.
Innes also said the expectation that the United States Federal Reserve was expected to cut interest rates by 50 bps should be favourable to the ringgit and Asean currencies
Meanwhile, the ringgit was traded mixed against other major currencies.
It rose against the Singapore dollar to 3.0194/0233 from 3.0236/0260 on Monday and increased versus the Japanese yen to 3.8934/8982 from 3.8952/8987.
The local unit, however, depreciated against the British pound to 5.3725/3793 from yesterday’s 5.3617/3672 and weakened vis-a-vis the euro to 4.6775/6836 from 4.6539/6589 previously. – Bernama