Ringgit ends lower after US Fed hints at rate hike

The Malaysian ringgit closed lower against the US dollar on the opening day of September after hints from the Federal Reserve that an interest rate hike may be imminent. On the final trading day of August, the currency ended at 4.0230/4.0270 against the greenback. However, by 6pm on September 1st, it had fallen to 4.0370/4.0410.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid attributed this decline to Kevin Warsh's speech at the Jackson Hole Symposium, which has raised concerns about inflation. Warsh's remarks suggest that monetary tightening is likely in the near future, particularly during the Federal Open Market Committee's meeting starting September 15.

The ringgit's depreciation of 0.32% against the US dollar was not isolated; other Southeast Asian currencies such as the Indonesian rupiah, Thai baht, and Singapore dollar also weakened against the US dollar by 0.12%, 0.31%, and 0.18%, respectively. This trend is expected to continue as investors closely monitor upcoming data points, such as the ISM Manufacturing Index, which is scheduled for release tonight.

Afzanizam predicts that the index will be 55.2 points in August, compared to 55.6 points in July. Despite weakening against the Japanese yen and British pound, the ringgit remained relatively stable against the euro, trading at 4.6801/4.6847. Its performance against regional currencies was mixed, with gains against the Thai baht and losses against the Singapore dollar and Philippine peso.