Ringgit Defies Rate Hike Expectations to Close Higher Against US Dollar

The ringgit closed higher against the US dollar on Friday, defying expectations of further interest rate hikes from the Federal Reserve. The currency strengthened to RM4.0715/0765 against the greenback, up from Thursday's close of RM4.0840/0880.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid attributed the ringgit's gain to bargain-hunting activity, despite the odds of rate hikes in October and December remaining high. According to interest rate futures contracts, the chances of rate hikes stand at 70.9% and 80.6%, respectively.

The ringgit also traded higher against a basket of major currencies, including the euro and British pound, but eased against the Japanese yen. It strengthened versus its Asean peers, the Singapore dollar and Indonesian rupiah, but weakened against the Thai baht and Philippine peso.