Ringgit gains as US debt weighs on greenback, easing rate hike expectations
KUALA LUMPUR: The ringgit opened higher against the US dollar on Thursday as concerns over the rising US government debt weighed on the greenback, dimming expectations of a US interest rate hike, an economist said.
At the opening of Thursday's trading session, the Malaysian ringgit strengthened against the US dollar, opening at 4.0455/0540, compared to the previous close of 4.0565/0610. Dr Mohd Afzanizam, chief economist at Bank Muamalat Malaysia Bhd, attributed the gain to concerns over surging US government debt, which now stands at over US$40 trillion.
This debt surge occurred even as the US Treasury Department attempted to lower long-term yields through direct intervention in the bond market. Dr Afzanizam cautioned that a near-term rate hike by the US Federal Reserve (Fed) could exacerbate the situation by making it harder for the US to meet its debt obligations. As a result, the US Dollar Index (DXY) fell by 0.86 percent to 98.798 points, signaling a decreased likelihood of a rate hike in September.
Dr Afzanizam predicted the ringgit to perform positively against the US dollar within the range of RM4.04 to RM4.06 for the day. The local currency initially traded weaker against other major currencies, including the Japanese yen, British pound, euro, Singapore dollar, Thai baht, Indonesian rupiah, and Philippine peso.
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Also reported by 1 other outlet
- Ringgit gains as US debt weighs on greenback freemalaysiatoday.com
