Ringgit opens slightly lower after hawkish FOMC outcome

The Malaysian ringgit opened slightly lower against the US dollar on Thursday following a hawkish statement from the US Federal Open Market Committee (FOMC). The local currency fell to 4.0855/4.0910 against the greenback, compared to Tuesday's close of 4.0835/4.0880. The US Federal Reserve increased its benchmark interest rate by 25 basis points to a range of 3.75% to 4.00%, marking its first rate hike since 2023.

Afzanizam Rashid, chief economist at Bank Muamalat Malaysia Bhd, stated that the FOMC decision was met with a high degree of hawkishness, indicating the Fed's commitment to a tighter monetary policy to ensure price stability. The Fed chair emphasized that the monetary policy stance would be more restrictive, and the staff projected another quarter-point rate hike this year.

This move contributed to a stronger US dollar, with the US dollar index hovering around 100.322 points, while US Treasury yields increased. Afzanizam predicted the ringgit would trade lower against the US dollar, possibly around 4.08 to 4.10. The ringgit also exhibited positive movements against major currencies such as the euro, yen, and British pound, while trading mixed against Asean currencies, including the Singapore dollar, Thai baht, Indonesian rupiah, and Philippine peso.