Ringgit Boosts on Soft US Data, Rate Hike Odds Plummet
The Malaysian ringgit rose against major and regional currencies on Monday, thanks to softer US economic data that dampened expectations of a Federal Reserve interest rate hike in September.
According to Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam, the lower US consumer price index (CPI) and weaker jobs data last week reduced the likelihood of a rate hike by the Fed next month.
The odds for a rate hike in September have gone down to 30 per cent from more than 50 per cent a month ago, Dr Afzanizam said. In that sense, sentiments over a rate hike in the Fed Funds Rate have shifted, and this could provide support to the ringgit in the immediate term.
The ringgit jumped 225 percentage-in-points (pips) to 4.0585/0630 versus the US dollar from last Friday's close of 4.0840/0885. It also strengthened against the Japanese yen, British pound, euro, Philippine peso, Thai baht, Indonesian rupiah, and Singapore dollar.