On a late September morning in Kuala Lumpur, the ringgit edged a little stronger against the US dollar, a small movement in a market that seemed uncertain of its own direction. Behind it stood a quieter and more consequential story: long-term American bonds had climbed to yields not seen in two decades, carrying with them fears of inflation born from unrest in West Asia. The ringgit's modest gain, set against a rising dollar and a tightening Federal Reserve, shows how a small economy must read distant tremors in the global bond market. For now the ringgit holds its ground, but the day's trajec
Ringgit Opens Higher Against US Dollar and Most Major Currencies as Treasury Yields Climb
Treasury yields at a two-decade high, yet the ringgit still edged ahead
Mark
The ringgit moved from 4.0840 to 4.0810. Why is that worth reporting?
Mimi
It's small, but it happened while US long-term yields hit a two-decade high, which usually lifts the dollar. The ringgit still edged ahead.
Luke
Worth saying plainly: this is an opening quote at 8am. It tells us nothing about where the ringgit closes.
Mark
What's the 5.48 per cent figure telling us?
Mimi
The 30-year Treasury yield rose eight basis points to that level, the highest in twenty years. Mohd Afzanizam reads it as an inflation risk premium building up.
Luke
That's his interpretation. The yield is a reported number; the reason behind it is an economist's view.
Mark
And West Asia?
Mimi
He links geopolitical risk there to possible upward pressure on crude oil prices, which feeds inflation worries.
Luke
Note the word 'could.' The source doesn't report an actual oil price move.
Mark
What's the expectation for today?
Mimi
A range of RM4.08 to RM4.10 against the dollar. It's a forecast from one economist, not a certainty.
Il Polso
- The 30-year US Treasury yield jumped eight basis points to 5.48 per cent, its highest in twenty years, and markets are feeling the tremor.
- West Asia geopolitical risks threaten to push crude oil higher, stoking fears that inflation will return to the global economy.
- The dollar index climbed to 101.285 as traders bet the Federal Reserve will keep tightening, pressing against emerging-market currencies.
- The ringgit opened firmer at 4.0810 against the greenback and gained across the euro, pound, yen and most Asean peers.
- Analysts expect the ringgit to hover between RM4.08 and RM4.10 today, with every shift in West Asia tensions and Fed signals watched closely.
On a late September morning in Kuala Lumpur, the ringgit edged a little stronger against the US dollar, a small movement in a market that seemed uncertain of its own direction. Behind it stood a quieter and more consequential story: long-term American bonds had climbed to yields not seen in two decades, carrying with them fears of inflation born from unrest in West Asia. The ringgit's modest gain, set against a rising dollar and a tightening Federal Reserve, shows how a small economy must read distant tremors in the global bond market. For now the ringgit holds its ground, but the day's trajectory will depend on whether those distant pressures keep climbing.
At 8am in Kuala Lumpur on September 25, the ringgit stood at 4.0810/0865 against the US dollar, slightly stronger than the previous close of 4.0840/0880. In a market Bernama described as mixed, it was a small move, but one that sat on top of a much larger story unfolding in the bond markets far away.
The 30-year US Treasury yield had risen eight basis points to 5.48 per cent, its highest level in two decades. Bank Muamalat Malaysia's chief economist, Dr Mohd Afzanizam Abdul Rashid, read the climb as a building premium for inflation risk, driven by geopolitical tension in West Asia that could lift crude oil prices and, with them, fears of rising prices.
The same currents lifted the US Dollar Index to 101.285, as markets priced in further tightening from the Federal Reserve. Even so, the ringgit gained at the open, firming against the euro, the British pound, the yen and most of its Asean neighbours.
For the day ahead, Dr Mohd Afzanizam expects the ringgit to trade between RM4.08 and RM4.10. The question now is whether West Asia tensions and expectations of Fed tightening will keep Treasury yields and the dollar climbing.
At 8am in Kuala Lumpur on September 25, the ringgit stood at 4.0810/0865 against the US dollar, a shade stronger than the 4.0840/0880 at which it closed the day before. It was a small move, and it came in a market that Bernama described as mixed.
The backdrop was the US bond market. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid told Bernama that Treasury yields continued to shape sentiment. The yield on the 30-year US Treasury bond rose eight basis points to 5.48 per cent, the highest level in two decades.
His reading was that the climb points to an inflation risk premium building in long-term bonds. He tied this to heightened geopolitical risks in West Asia, which he said could push crude oil prices higher. That, in turn, would feed inflation worries.
The same forces, he said, appeared to be supporting the US Dollar Index, which rose 0.19 per cent to 101.285 points. He attributed this to expectations that the US Federal Reserve will keep tightening monetary policy. Even so, the ringgit gained on the dollar at the open.
It also firmed against most major currencies. Against the euro it rose to 4.6413/6476 from 4.6451/6497. Against the British pound it moved to 5.3910/3983 from 5.4023/4076, and against the Japanese yen to 2.5694/5730 from 2.5723/5750.
The gains extended to its Asean peers. The ringgit edged up against the Singapore dollar to 3.1885/1931 from 3.1906/1940, and strengthened against the Thai baht to 12.1854/2091 from 12.1950/2121. It was slightly firmer against the Indonesian rupiah at 227.7/228.2 from 227.9/228.2, and edged higher against the Philippine peso at 6.50/6.51 from 6.51/6.52.
For the rest of the day, Mohd Afzanizam expects the ringgit to trade between RM4.08 and RM4.10 against the US dollar. What to watch is whether West Asia tensions and Fed tightening expectations keep Treasury yields and the dollar index moving higher.
Citazioni salienti
The rise in long-term bond yields implies that an inflation risk premium is building up, as heightened geopolitical risks in West Asia could exert upward pressure on crude oil prices.— Dr Mohd Afzanizam Abdul Rashid, chief economist, Bank Muamalat Malaysia Bhd
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Economy & Finance