Ringgit Gains as Rising US Debt Weighs on Greenback

The ringgit gained value against the US dollar on Thursday as concerns over rising US government debt weighed on the greenback. Dr Mohd Afzanizam, chief economist at Bank Muamalat Malaysia Bhd, said that the US$40 trillion in public debt outstanding is a major concern and has contributed to the decline of the US dollar index.

The US Treasury Department's attempts to bring down long-term yields via direct intervention in the bond market have been met with limited success. Dr Afzanizam noted that if the US Federal Reserve (Fed) were to raise interest rates, it could further undermine the US government's ability to repay its debt obligations.

The ringgit traded at 4.0455/0540 against the greenback, a slight improvement from Wednesday's close of 4.0565/0610. Dr Afzanizam expects the ringgit to perform favourably against the US dollar between RM4.04 and RM4.06 today.