Ringgit closes lower on Fed rate hike expectations

 Expectations of a 25-basis-point interest rate hike by the Federal Reserve continued to support the US dollar, says analyst.

KUALA LUMPUR:

The ringgit closed lower against the US dollar today as expectations of a possible Federal Reserve (Fed) interest rate hike later this year boosted demand for the greenback.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid said expectations of a 25-basis-point interest rate hike by the Fed this year continued to support the US dollar.

“This is despite the Fed’s forecast for lower federal fund rates of 3.6% in 2027 and 3.4% in 2028, compared with 3.8% in 2026.

“Hence, we believe there appears to be a knee-jerk reaction among traders as the Fed is also abandoning forward guidance in its accompanying statement,” he told Bernama.

At 6pm, the local currency fell to 4.1145/4.1195 against the greenback from 4.0665/4.0700 at Tuesday’s close.

At the close, the ringgit was mostly lower against a basket of major currencies.

It depreciated against the Japanese yen to 2.5588/2.5620 from 2.5360/2.5384 at Tuesday’s close and slipped versus the euro to 4.7222/4.7280 from 4.7175/4.7216.

However, it strengthened against the British pound to 5.4476/5.4542 from 5.4552/5.4599 previously.

Against regional currencies, the local note was lower.

It weakened against the Thai baht to 12.5611/12.5809 from 12.5027/12.5192 at Tuesday’s close, depreciated versus the Indonesian rupiah to 231.2/231.5 from 229.3/229.7 previously, eased against the Philippine peso to 6.79/6.80 from 6.74/6.75 and declined against the Singapore dollar to 3.1898/3.1939 from 3.1722/3.1752. - FMT