KUALA LUMPUR, Oct 18 — The ringgit closed marginally higher against the US dollar in line with most emerging currencies as risk sentiment improved and the greenback tentatively softened, analysts said.

At 6pm, the local note ticked up to 4.7145/7165 from yesterday’s close of 4.7150/7185.

SPI Asset Management managing director Stephen Innes said this was backed by news that the Bank of England would extend its emergency bond-buying programme.

He noted that the Chinese yuan was also relatively stable as the People’s Bank of China has been fixing the yuan in a tight range.

"That said, US dollar-Japanese yen (USD-JPY) is moving higher again despite threats of Bank of Japan intervention.

"USD-JPY has been a bellwether for Asian foreign exchange, so we could see the ringgit open weaker tomorrow if the USD-JPY continues to march higher overnight,” he told Bernama.

Separately, RAM Rating Services Bhd in a note said that the aggressive US interest rate increase has dampened the appeal of emerging market bonds.

Foreign demand for Malaysian Government Securities and Conventional Government Investment Issues waned in September with net outflows amounting RM2.5 billion amid the continued hawkish stance of the US Federal Reserve (Fed) in raising rates.

Year to date, the Fed has raised rates by a total of 300 basis points. The 10-year US Treasury (UST) yield jumped 68.0 basis points (bps) month-on-month to 3.83 per cent as at end-September, outpacing the 10-year MGS yield which rose 45.7 bps to 4.44 per cent as at the same date.

"Consequently, this has narrowed the differential between MGS and UST yields, reducing the appeal of ringgit bonds for foreign buyers.

"The rate differential persisted in October, where the UST yields continued to outpace the increase in MGS yields,” said the credit rating agency.

Meanwhile, the ringgit was traded mixed against a basket of major currencies.

It rose versus the British pound to 5.3118/3141 from 5.3199/3239 and gained vis-a-vis the Japanese yen to 3.1630/1646 from 3.1712/1738 previously.

The local note, however, eased against the Singapore dollar to 3.3168/3184 from 3.3053/3080 yesterday and weakened against the euro to 4.6372/6391 from 4.5981/6015. — Bernama