THe ringgit, which opened sharply higher yesterday, retreated slightly later to close at 3.3710/3730 against the US dollar, up from from 3.3725/3755 on Wednesday.
This reflected the strengthening of the greenback against other major currencies, according to the dealers.
"The US dollar moved up slightly yesterday on the weakening of most Asian equities, prompting investors to shift towards safe-haven currencies," said one of the dealers who added that the fall on Bursa Malaysia also eroded demand for the local currency.
The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index lost 2.01 points to 1,284.09, as investors reduced their holdings ahead of Bank Negara Malaysia's monetary policy statement.
The central bank is scheduled to release the statement later yesterday.
"Investors turned cautious as they were awaiting the outcome of Bank Negara's monetary policy committee meeting, which could provide an indication as to the future trend of Malaysia''s interest rates," another dealer said.
At close of trading, the ringgit was, however, lower against other major currencies.
It declined against the Singapore dollar to 2.4058/4095 from 2.4032/4081 on Wednesday and also against the Japanese yen to 3.8116/8165 from 3.8005/8044 previously.
The ringgit fell against the euro to 4.6065/6095 from 5.5930/5964 on Wednesday and also against the British pound to 5.0754/0801 from 5.0599/0649 previously.
SHORT-TERM interbank rates ended stable yesterday as Bank Negara Malaysia intervened, issuing several money market tenders, to keep excess liquidity in check, dealers said.
The overnight rate was quoted at 2 per cent, while the one-week, two-weeks and three-weeks rates hovered between 2.03 per cent and 2.07 per cent.
The central bank carried out seven conventional tenders, four Al-Wadiah tenders, a repo and a Commodity Murabahah Programme tender to offset the liquidity surplus.
As a result, the excess liquidity in the conventional system was reduced to RM42.27 billion, from RM54.97 billion estimated earlier, while the surplus in the Islamic system eased to RM14.9 billion from RM19.4 billion previously.
The central bank also borrowed RM17 billion from conventional operations and another RM10 billion from Islamic funds, both for one-day money.
THE three-month Kuala Lumpur Interbank Offered Rate (KLIBOR) futures on Bursa Malaysia Derivatives ended flat yesterday, dealers said.
The March 2010 and June 2010 contracts remained at Wednesday's closing of 97.60 and 97.40, respectively.
Turnover stood at 200 lots and open interest was at 39,299 contracts.
The underlying three-month KLIBOR was unchanged at 2.3 per cent.
The five-year Malaysian Government Securities futures were untraded throughout the day. - Bernama