Ringgit opens lower amid higher oil prices, Fed rate hike bets

KUALA LUMPUR: On Wednesday, the Malaysian ringgit opened lower against the US dollar amid rising Brent crude oil prices, which increased worries about inflation and heightened expectations of an upcoming Federal Reserve rate hike, according to an analyst. By 8am, the ringgit fell to 4.0380/4.0445 against the greenback from Tuesday's close of 4.0370/4.0410.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid attributed the drop to the resumption of US-Iran military clashes, which pushed Brent crude oil prices up. Currently, Brent crude is up 0.78% at US$95.46 a barrel. Rashid noted that inflation concerns and a higher likelihood of a Fed rate hike have strengthened the US dollar.

The DXY index rose 0.25% to 99.677 points, with the odds of a September Fed rate hike reaching 65%. Consequently, he anticipates the ringgit to trade cautiously between 4.03 and 4.05 today. Initially, the ringgit performed better against a basket of major currencies, strengthening against the Japanese yen, British pound, and euro, while weakening against the Singapore dollar and remaining stable against the Indonesian rupiah and Thai baht.