Ringgit Dives Amid Elevated Yields and Military Tensions

The ringgit opened lower against the US dollar on Tuesday due to elevated US Treasury yields and uncertainty over the US Federal Reserve's (Fed) interest rate outlook.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the 30-year US Treasury bond yield has been rising persistently to 5.25 per cent, amid expectations that the Fed could maintain a cautious stance on interest rates at the upcoming Federal Open Market Committee meeting on September 15-16.

This follows Fed chairman Kevin Warsh's speech at the Jackson Hole Symposium, where he indicated that inflation remains high while the labour market remains healthy. This has raised concerns that the Fed may raise interest rates, which contradicts the US Treasury Department's aim of lowering long-term bond yields through its buyback plans.

The ringgit is expected to remain cautious against the US dollar amid the resumption of military attacks between the US and Iran, which pushed Brent crude prices higher to $90.49 per barrel. Mohd Afzanizam forecasts that the US dollar-ringgit pair will range between 4.02 and 4.04 today.