Ringgit at Risk: Fed Hike Could Push Currency Beyond RM4.10

Bank Muamalat Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid predicts that the ringgit could weaken beyond RM4.10 against the US dollar if the Federal Reserve raises interest rates in response to renewed inflationary pressure.

Afzanizam noted that higher US interest rates tend to support the dollar, increasing its relative attractiveness and putting pressure on emerging-market currencies like the ringgit.

The likelihood of a September rate hike by the Fed has receded following softer inflation, weaker retail sales, and an unexpected decline in US employment. However, Afzanizam emphasized that higher inflation remains a contentious point for the Fed's interest-rate decisions.