Ringgit Falls Against Dollar as Fed Hints at Rate Hike

The ringgit ended lower against the US dollar on its first trading day in September due to rising expectations of a US interest rate hike. According to Dr Mohd Afzanizam Abdul Rashid, Bank Muamalat Malaysia Bhd's chief economist, Federal Reserve Chair Kevin Warsh's recent speech at the Jackson Hole Symposium has had a significant impact on the currencies market.

Warsh expressed concern over inflation, implying that monetary tightening is almost inevitable in the near term. The ringgit depreciated by 0.32% to RM4.0398 today, while other ASEAN currencies such as the Indonesian rupiah and Thai baht also fell against the US dollar.

The local note traded mostly lower against regional currencies, declining against the Singapore dollar and slipping against the Philippine peso. However, it gained against the Thai baht.