KUALA LUMPUR: The ringgit continued to strengthen against the US dollar, driven by a decline in the US Dollar Index (DXY), as investors anticipated potential rate cuts by the Federal Reserve, according to an analyst.
At 8 am, the ringgit improved to 4.3755/3840 against the US dollar, up from 4.3780/3850 at Tuesday's close.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the DXY index fell to 101.441, its lowest in seven months, as major currencies gained strength against the greenback.
"The two-year US Treasury yield, which is most sensitive to US central bank policy, dropped seven basis points to 3.99 per cent.
"On that note, the ringgit is expected to be well supported today on account of the interest rate cut prospects in the US, which will result in narrower interest rate differentials between the Fed Funds Rate and the Overnight Policy Rate," he told Bernama.
Mohd Afzanizam also identified RM4.30 as the immediate support level for the ringgit against the US dollar.
Meanwhile, the ringgit traded lower against a basket of major currencies.
It weakened against the Japanese yen to 3.0103/0164 from 2.9917/9967 at Tuesday's close, slipped vis-a-vis the euro to 4.8686/8781 from 4.8491/8568, and depreciated against the British pound to 5.7026/7137 from 5.6927/7018 previously.
Additionally, the ringgit showed mixed performance against ASEAN currencies.
It edged up slightly against the Indonesian rupiah to 283.4/284.1 from 283.5/284.2 yesterday, and gained vis-a-vis the Philippine peso at 7.73/7.75 from 7.74/7.75 previously.
However, the ringgit fell against the Singapore dollar to 3.3536/3604 from 3.3466/3522 at Tuesday's close and eased against the Thai baht to 12.8085/8412 from 12.7982/8254 yesterday.