Ringgit starts Wednesday stronger with all eyes on Fed chief’s Jackson Hole speech

KUALA LUMPUR, Aug 26 — The Malaysian ringgit began the trading day on a stronger note on Wednesday, buoyed by a weaker US dollar and falling US Treasury yields, according to an analyst. By 8:04 am, the currency had risen to 4.0380/0445 against the US dollar, up from Monday's closing rate of 4.0405/0440. The market had been shut on Tuesday in observance of Prophet Muhammad's birthday.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid highlighted the importance of long-term US Treasury bond yields, noting that the 30-year US Treasury securities yield had dropped by six basis points to 5.17 percent. He also mentioned that there were reports of the US Treasury Department potentially dipping into the Treasury General Account, cash held at the Federal Reserve, to fund the buyback program.

This development could further bolster the US Dollar Index (DXY), which slipped 0.10 percent to 98.905 points. The ringgit's strength was likely due to the US authorities' disinclination towards a higher interest rate regime. However, the future moves of the US Federal Reserve, particularly Fed Chair Kevin Warsh's speech at the Jackson Hole Symposium, remain a subject of keen interest.

At the opening, the ringgit traded at a disadvantage against a basket of major currencies but slightly improved against the Japanese yen, dropping against the British pound and the euro, and performing better against regional currencies. Specifically, it strengthened against the Indonesian rupiah, edged up against the Philippine peso, and rose against the Thai baht. However, it slipped against the Singapore dollar.