Ringgit Falls as US Interest Rate Hike Expectations Rise

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

Warsh's concern over inflation implies that monetary tightening is almost inevitable in the near term, especially during the Federal Open Market Committee's two-day meeting beginning September 15. The ringgit depreciated by 0.32 per cent to RM4.0398 today, while other ASEAN currencies such as the Indonesian rupiah, Thai baht and Singapore dollar were also lower against the US dollar.

The upcoming data point of the ISM Manufacturing Index will be closely monitored, with consensus estimates pegged at 55.2 points in August versus 55.6 points in July. The ringgit appreciated against the euro but weakened against the Japanese yen and British pound.