Ringgit Gains Amid Expectations of US and Japanese Rate Hikes

The Malaysian ringgit opened higher against the US dollar on Wednesday due to expectations of interest rate hikes in the US and Japan. According to Afzanizam Rashid, Bank Muamalat Malaysia Bhd's chief economist, higher US Treasury yields suggest that the Federal Reserve may opt for a higher benchmark interest rate at its upcoming meeting.

The ringgit strengthened to 4.0560/4.0635 against the greenback from Tuesday's close of 4.0605/4.0640. Afzanizam also noted that the Japanese yen gained strength against the US dollar, reaching 153.53 yen, as markets expect the Bank of Japan to raise its policy rate on September 18.

However, currency markets are treating an expected Fed rate move as an 'insurance hike' rather than a sustained tightening cycle, according to global strategist Stephen Innes. He added that investors view this move as potentially reversible once West Asia tensions ease and oil prices stabilize.