Ringgit ends slightly higher against greenback on Fed rate outlook

KUALA LUMPUR: On Wednesday, the Malaysian ringgit ended marginally higher against the US dollar, buoyed by expectations that the US Federal Reserve might postpone an interest rate increase next month, following weaker-than-anticipated consumer sentiment data. By 6pm, the ringgit climbed to 4.0785/0820 against the greenback, up from Tuesday's close of 4.0790/0850.

Dr Mohd Afzanizam Abdul Rashid, the chief economist at Bank Muamalat Malaysia Bhd, noted that Asian currencies, including the ringgit, gained momentum due to recent US data indicating the Fed might avoid a rate hike. He added that weaker consumer sentiment could dampen household spending, which makes up roughly two-thirds of the US economy.

Market participants are expected to closely observe the ADP employment and Personal Consumption Expenditures (PCE) reports released later that evening. According to consensus estimates, ADP employment for September is projected to rise to 73,000 from 38,000 in August, while PCE inflation is expected to remain steady at 3.7% in August.

Should the job figures and inflation rate prove weaker than expected, the US dollar could face further depreciation in the near term, Mohd Afzanizam told Bernama. By market close, the ringgit traded slightly lower against a selection of major currencies, falling against the euro, British pound, and Japanese yen, as well as against the Singapore dollar, Thai baht, and Indonesian rupiah.