Ringgit Mixed After US Fed Rate Hike, Markets Anticipate Further Monetary Tightening

The ringgit ended mostly higher against major currencies on Thursday, but weakened against the US dollar after the US Federal Reserve raised its federal funds rate target range to 3.75-4.00 per cent from 3.50-3.75 per cent.

According to Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, 'the Fed is unlikely to be done with its 25-basis-point rate hike' and may raise interest rates further as it remains committed to bringing inflation back to its two per cent target.

The ringgit fell to 4.0965/1010 against the greenback from Tuesday's close of 4.0835/0880, but rebounded to touch a high of 4.1012 before closing at 4.0965. It also rose against the euro, yen, and British pound.

The US central bank's decision sparked caution among investors, with Dr Afzanizam warning that 'market sentiments are expected to remain guarded amid the restrictive monetary policy stance adopted by the major central banks.'