Will the US Fed change its tone? Ringgit waits for clues

KUALA LUMPUR, October 24 — Analysts anticipate the Malaysian ringgit to fluctuate within a tight range of RM4.07 to RM4.08 against the US dollar throughout the upcoming week as market participants await the outcome of the Federal Open Market Committee (FOMC) meeting, set to take place on October 27-28. Bank Muamalat Malaysia Bhd chief economist, Dr Mohd Afzanizam Abdul Rashid, highlighted that investors will also be observing key indicators from the FOMC statement and the subsequent press conference to gauge the Federal Reserve's (Fed) stance on monetary policy.

Dr Rashid stated that market confidence will largely depend on the Fed's assessment of inflation, as well as the prevailing conditions around investments in artificial intelligence and equity valuations. The most significant aspect, he emphasized, is whether the Fed will alter its tone regarding the current monetary policy stance and the projected paths for present and future inflation rates.

Consequently, the US dollar-ringgit pair is expected to maintain a narrow trading range. Over the past week, the ringgit weakened against the US dollar, moving from 4.0795/0835 to 4.0835/0875. Throughout the week, the local currency traded predominantly lower against a basket of major currencies. It saw a slight decline against the Japanese yen, dropping from 2.5831/5895 to 2.6076/6103, and experienced a depreciation against the British pound, falling from 5.4396/4449 to 5.4633/4687.

However, the ringgit strengthened relative to the euro, rising from 4.5911/5956 to 4.5735/5780. On a week-to-week basis, the ringgit generally appreciated against various ASEAN currencies. It rose against the Thai baht, moving from 12.2101/2268 to 12.0985/1154, increased against the Indonesian rupiah, climbing from 226.3/226.6 to 225.8/226.1, and gained against the Philippine peso, moving from 6.48/6.49 to 6.42/6.43.

Nevertheless, the local note experienced a decline against the Singapore dollar, falling from 3.1889/1922 to 3.1952/1986.