Ringgit gets a boost at market close as US data cools, Fed hike expectations fade

On Monday, the Malaysian ringgit experienced a boost in value against major and regional currencies, including the US dollar, as weaker US economic data reduced the likelihood of a Federal Reserve interest rate hike in September. At 6 pm, the ringgit surged 225 percentage points (pips) to 4.0585/0630 against the US dollar, marking a notable improvement from last Friday's closing rate of 4.0840/0885.

Dr. Mohd Afzanizam, the chief economist at Bank Muamalat Malaysia Bhd, attributed this shift in sentiment to the lower US Consumer Price Index (CPI) and weaker jobs data released last week. He noted that the probability of a rate hike in the Federal Funds Rate for September had decreased to 30 percent, down from over 50 percent a month earlier.

Consequently, this change in expectations provided support to the ringgit in the short term. The US CPI increased by 0.1 percent in July, resulting in an annual inflation rate of 3.4 percent, while nonfarm payrolls decreased by 23,000 in July, falling short of economists' forecasts for an increase around 80,000 jobs. By the close of trading, the local currency gained against a range of major currencies, including the Japanese yen, British pound, euro, Philippine peso, Thai baht, Indonesian rupiah, and Singapore dollar.

This gain was evident in the ringgit's strengthened value against the Japanese yen, rising from 2.5660/5690 to 2.5496/5526; it also improved against the British pound, jumping from 5.5232/5293 to 5.5021/5082, and strengthened vis-à-vis the euro, moving from 4.7182/7234 to 4.7062/7115. Additionally, the ringgit exhibited gains against the Philippine peso, Thai baht, Indonesian rupiah, and Singapore dollar, illustrating a favorable trend throughout the trading session.