Ringgit closes higher against US dollar despite Fed rate hike expectations

 Interest rate futures put the odds of US rate hikes in October and December at 70.9% and 80.6%, up from 55.4% and 77.6%, says analyst.

KUALA LUMPUR:

The ringgit closed higher against the US dollar on Friday, driven by bargain-hunting activity despite expectations of further US interest rate hikes.

At 6pm, the ringgit increased to 4.0715/4.0765 versus the greenback from yesterday’s close of 4.0840/4.0880.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the ringgit strengthened to RM4.0673 against the US dollar early in the morning before giving up some of its gains to trade at RM4.0743 in the afternoon.

He said the US Dollar Index (DXY) remained well supported at 101.182 points as the odds of the Federal Reserve (Fed) raising interest rates stayed high.

“Based on the interest rate futures contract, the odds of rate hikes in October and December currently stand at 70.9% and 80.6%, respectively, up from 55.4% and 77.6% last Monday,” he told Bernama. 

At the close, the ringgit traded mostly higher against a basket of major currencies.

It gained against the euro to 4.6378/4.6435 from 4.6451/4.6497 at Thursday’s close and advanced vis-à-vis the British pound to 5.3907/5.3973 from 5.4023/5.4076. However, it eased versus the Japanese yen to 2.5764/2.5797 from 2.5723/2.5750 previously.

The local currency traded mixed against its Asean peers.

It strengthened versus the Singapore dollar to 3.1858/3.1900 from 3.1906/3.1940 at yesterday’s close and edged up against the Indonesian rupiah to 227.4/227.8 from 227.9/228.2.

However, the ringgit weakened versus the Thai baht to 12.2036/12.2234 from 12.1950/12.2121 yesterday and slipped vis-a-vis the Philippine peso to 6.52/6.53 from 6.51/6.52. - FMT