Ringgit ends lower ahead of Jackson Hole symposium
Traders will scrutinise US Federal Reserve chair Kevin Warsh’s Jackson Hole speech tomorrow for clues on the Fed’s next Federal Open Market Committee decision, says analyst.
KUALA LUMPUR: The ringgit closed lower against the US dollar on Friday, as traders braced for the US Federal Reserve’s (Fed) Jackson Hole symposium. Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid cautioned that analysts would closely examine US Fed chair Kevin Warsh’s speech at the symposium for insights into the Fed’s potential decision at the upcoming Federal Open Market Committee (FOMC) meeting on September 15-16.
He noted that the US government’s debt, currently estimated at US$40.1 trillion, combined with rising Treasury yields, would lead to increased debt servicing costs. Rashid anticipated the ringgit to hold steady near the current 3.50%-3.75% Federal Funds Rate range, supported by the hypothesis of the Fed keeping rates unchanged. The Jackson Hole symposium, taking place from August 27-29, is a highly anticipated event in financial circles, as it could provide valuable clues on the Fed’s next steps regarding interest rates.
Should the Fed hint at a rate cut, the US dollar may weaken, potentially benefiting the ringgit. Meanwhile, Quintex Intel global strategist Stephen Innes pointed out that the main focus of the Jackson Hole symposium would be Warsh’s address at 10am Eastern Time on Friday. Traders would closely monitor the tone of his speech, as it would likely determine whether the US dollar continues its recent rebound or loses momentum.
The slight weakening of the ringgit on Friday was primarily attributed to a slightly stronger-than-expected US core inflation reading, which reignited expectations of a Fed rate hike, particularly in December. Despite the modest shift, the low-volatility foreign exchange market was sufficient to exert downward pressure on the ringgit.
The ringgit ended slightly higher against a basket of major currencies at 4.0305/4.0350 against the US dollar, compared to its previous close of 4.0240/4.0280. Throughout the day, the ringgit displayed gains against the Japanese yen, British pound, and euro, while trading mixed against regional currencies such as the Singapore dollar, Indonesian rupiah, Philippine peso, and Thai baht.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
