Ringgit extends gains against dollar amid US debt concerns

KUALA LUMPUR: The Malaysian ringgit continued to strengthen against the US dollar on Thursday, with the national debt surpassing the $40 trillion mark impacting the currency's value. By 6pm, the ringgit had climbed 140 pips to trade between 4.0425/4.0470 against the US dollar, following Wednesday's close of 4.0565/4.0610. Afzanizam Rashid, chief economist at Bank Muamalat Malaysia Bhd, attributed the recent focus on US public debt to the Treasury's efforts to curb excessive Treasury yields.

Direct intervention by the US government in the treasury markets to prevent long-term yields from rising excessively, he explained, was the primary driver of market sentiment. Currently hovering around 5.22%, the 30-year US Treasury yield has recently surpassed the 5.30% threshold, potentially signaling a less likely scenario of the Federal Reserve raising the Federal Funds Rate during the September meeting.

In contrast to the ringgit's performance, it weakened against a basket of major currencies, including the Japanese yen, British pound, and euro. Conversely, the local note exhibited slight gains against the Indonesian rupiah, Thai baht, and Singapore dollar.