Ringgit Plummets Against US Dollar After First Fed Rate Hike Since 2023
The Malaysian ringgit plummeted to a new low against the US dollar on Thursday following the Federal Reserve's decision to raise interest rates for the first time since 2023. The local currency dropped to 4.0855/0910 against the greenback from Tuesday's close of 4.0835/0880, marking a slight decrease in value.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid attributed the Fed's hawkish stance to its commitment to achieving price stability through tighter monetary policy. The quarterly projection by the Fed staff showed that there will be another quarter-point rate hike this year, which has driven the US dollar higher and contributed to the ringgit's decline.
The ringgit performed mixed against other major currencies, with slight gains against the euro, yen, and British pound, but losses against its Asean peers. The currency leapt against the Singapore dollar to 3.1965/2013 from 3.2093/2131 previously, and increased against the Thai baht to 12.2265/2485 from 12.2620/2800 at Tuesday's close.
Dr Mohd Afzanizam predicted that the ringgit is expected to trade lower against the US dollar today, possibly around 4.08 to 4.10. He noted that the Fed chair indicated during his press conference that the monetary policy stance is expected to be more restrictive and that they are serious about meeting one of its dual mandates.