The odds of a September rate hike have fallen significantly, shifting market expectations and potentially supporting the ringgit in the immediate term, says an analyst.
At 6pm, the ringgit jumped 225 percentage in points (pips) to 4.0585/4.0630 versus the US dollar from last Friday’s close of 4.0840/4.0885.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the lower US consumer price and producer price indices, as well as weaker jobs data last week, appeared to ease expectations of a potential rate hike by the Fed next month.
“The odds for a rate hike in September have gone down to 30% from more than 50% a month ago. In that sense, sentiments over a rate hike in the Fed Funds Rate have shifted, and this could provide support to the ringgit in the immediate term,” he told Bernama.
The US CPI was reported to have risen 0.1% in July, bringing annual inflation to 3.4%, while nonfarm payrolls fell by 23,000 in July compared with economists’ forecasts for a gain of around 80,000 jobs.
At the close, the local currency ended higher against a basket of major currencies.
It strengthened against the Japanese yen to 2.5496/2.5526 from 2.5660/2.5690 at last Friday’s close and gained vis-à-vis the British pound to 5.5021/5.5082 from 5.5232/5.5293. The ringgit rose against the euro to 4.7062/4.7115 from 4.7182/4.7234 previously.
The local currency also traded higher against regional currencies.
It was marginally higher against the Philippine peso at 6.60/6.61 from 6.64/6.66 and edged up against the Thai baht to 12.2948/12.3136 from 12.3153/12.3333.
It gained against the Indonesian rupiah to 228.0/228.3 from 229.0/229.4 at last Friday’s close, and climbed against the Singapore dollar to 3.1804/3.1842 from 3.1924/3.1964 previously. - FMT
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