Ringgit Falls on US Interest Rate Hike Expectations
The Malaysian ringgit depreciated against the US dollar on its first trading day in September due to rising expectations of a US interest rate hike. According to Afzanizam Rashid, chief economist at Bank Muamalat Malaysia Bhd, Federal Reserve chair Kevin Warsh's recent speech at the Jackson Hole Symposium has had a significant impact on the currency market.
Warsh's speech highlighted his concern over inflation, implying that monetary tightening is almost inevitable in the near-term. The Federal Open Market Committee will meet from September 15 to discuss interest rates.
The ringgit fell by 0.32% to RM4.0398 against the US dollar today, while other ASEAN currencies such as the Indonesian rupiah and Thai baht also depreciated. Against a basket of major currencies, the ringgit appreciated against the euro but weakened against the Japanese yen.
Afzanizam noted that upcoming data points, including the ISM manufacturing index, will be closely monitored. The consensus estimate for the ISM index is 55.2 points in August versus 55.6 points in July.