Ringgit closes higher against US dollar despite Fed rate hike expectations

KUALA LUMPUR – The Malaysian ringgit closed higher against the US dollar on Friday, benefiting from bargain-hunting despite expectations of additional US interest rate hikes. By 6pm, the ringgit had risen to 4.0715/0765 per US dollar from Thursday's close of 4.0840/0880. Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, explained that the ringgit strengthened to RM4.0673 at the start of the trading day before losing some of its gains, trading at RM4.0743 in the afternoon.

He noted that the US Dollar Index (DXY) remained well-supported at 101.182 points, with high odds of Federal Reserve (Fed) interest rate hikes in October and December. These odds were 70.9% and 80.6% respectively, up from 55.4% and 77.6% last Monday, according to his analysis from Bernama. At the end of trading, the ringgit traded mostly higher against a range of major currencies, gaining against the euro to 4.6378/6435 from 4.6451/6497, and against the British pound to 5.3907/3973 from 5.4023/4076.

However, it slipped against the Japanese yen to 2.5764/5797 from 2.5723/5750. The local currency also fluctuated against its Asean peers, strengthening versus the Singapore dollar to 3.1858/1900, edging up against the Indonesian rupiah to 227.4/227.8, but weakening versus the Thai baht to 12.2036/2234 and slipping vis-a-vis the Philippine peso to 6.52/6.53.