KUALA LUMPUR: The ringgit opened slightly lower vis-a-vis the US dollar on Monday due to the strengthening of the greenback as safe-haven demand for the currency among investors kicked in.
This is while they are concerned about a foreign policy pivot following US president-elect Joe Biden’s inauguration this week.
At 9.03am, the ringgit stood at 4.0450/0510 versus the US dollar from the 4.0350/0380 at Friday close.
The ringgit also fell when the country reimposed the Movement Control Order (MCO) last Monday. The local note depreciated by 0.2% last week, falling further to RM4.037 per US dollar as the government imposed the MCO 2.0 in selected states and federal territories.
A state of emergency has also been declared in the country until Aug 1, or until the current wave of Covid-19 subsides, allowing the government to focus on curbing the pandemic and supporting the economy.
Apart from the growth concerns, the ringgit depreciated, tracking the decline in Brent crude oil prices, which fell by 1.6% to US$55.10 per barrel from US$55.99 per barrel last week.
“All eyes will be focusing on Bank Negara’s Monetary Policy meeting scheduled for tomorrow,” an analyst said.
He said the central bank is expected to make another interest rate cut in response to the potential impact on the economy after recent announcements of the state of emergency and MCO re-implementation.
Another cut in the overnight policy rate by another 25 basis points would bring the lending rate to a new low of 1.5%.
Meanwhile, against other major currencies, the local note opened mostly higher.
It strengthened against the British pound to 5.4919/5004 from 5.5029/5086 and appreciated to 4.8831/8920 from 4.8977/9021 versus the euro.
However, when compared with the Singapore dollar, the local note rose to 3.0375/0438 from 3.0386/0410 and fell to 3.8965/9027 from 3.8918/8962 against the yen.