The ringgit reversed last Friday's gains and closed lower against the US dollar today on cautious sentiment ahead of Bank Negara Malaysia's (BNM) rate decision later this week.
At 6pm, the local currency weakened to 4.4120/4145 against the dollar from Friday's close of 4.4060/4085.
Although S&P Global Ratings revised Malaysia's credit rating outlook to stable from negative, theringgit strengthened against the dollar as Federal Reserve Chairman Jerome Powell's hawkish reiteration pushed the US dollar index (DXY) above the 105.0 level, an analyst said.The dollarweakened slightly.
"Nevertheless, S&P's confidence in Malaysia, coupled with an improvement in the country's manufacturing activity, helped the local note limit its losses," he said.
On June 27, S&P Global Ratings upgraded Malaysia's long-term sovereign credit rating outlook to stable from negative, reflecting its expectation that the country's stable growth momentum and strong external position will remain intact over the next two years.
However, the analyst said theringgit could strengthen below the 4.40 level against the US dollaras BNM is expected to implement its first-ever back-to-back overnight policy rate hike by 25 basis points.
In addition to this, local notes may also benefit from a potential improvement in Malaysia's macroeconomic indicators.
Meanwhile, the ringgit was lower against a basket of major currencies.
The local currency fell to 5.3496/3526 against the pound from Friday's close of 5.3163/3193 and to 4.6070/6096 against the euro from 4.5060/6086.
It also weakened to 3.2578/2599 against the yen from 3.2483/2504 on Friday and was flat against the Singapore dollar at 3.1596/1618.
