Ringgit rises at open vs US dollar as Fed rate hike expectations ease

 The local note strengthens to 4.0565/4.0625 as focus shifts to FOMC minutes for interest rate outlook.

KUALA LUMPUR:

The ringgit opened higher against the US dollar, supported by expectations that the possibility of a US Federal Reserve (Fed) interest rate hike at its September meeting has receded, an economist said.

At 8am, the local currency strengthened to 4.0565/4.0625 against the greenback from Tuesday’s close of 4.0575/4.0615.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the focus now will be on the Federal Open Market Committee (FOMC) minutes, which will be released today, as the market would want to seek affirmation that the Fed is not in a hurry to tighten its monetary stance.

“At the same time, positive data points for Malaysia such as strong growth and stable inflation suggest the Malaysian economy is resilient, with Bank Negara Malaysia having the luxury to keep the policy rate.

“As such, we expect the ringgit to hover around RM4.05 to RM4.07 today,” he added.

At the opening, the local currency ended lower against a basket of major currencies.

It strengthened against the euro to 4.6958/4.7028 from 4.6982/4.7028 previously, but decreased vis-à-vis the Japanese yen to 2.5428/2.5467 from 2.5420/2.5446 and against the British pound to 5.4909/5.4990 from 5.4902/5.4956 at Tuesday’s close.

The local note also traded higher against the Singapore dollar to 3.1729/3.1778 from 3.1756/3.1790, and rose versus the Thai baht to 12.2453/12.2697 from 12.2657/12.2819.

The local currency was almost flat against the Indonesian rupiah at 227.1/227.5 from 227.1/227.4 and was unchanged against the Philippine peso at 6.56/6.58 at Tuesday’s close. - FMT