Ringgit Rises as Rate Hike Expectations Boost Dollar

The ringgit opened higher against the US dollar on Wednesday as the greenback weakened amid expectations of rate hikes in the United States and Japan.

According to Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid, higher US Treasury yields suggest that the Federal Reserve could opt for a higher benchmark interest rate when it meets on September 15-16.

The yield on three-month and six-month US Treasury bills was at 3.80 per cent and 3.89 per cent respectively.

Afzanizam also pointed out that the Japanese yen strengthened against the US dollar to 153.53 yen, reflecting growing expectations that the Bank of Japan could raise its policy rate.

The BOJ could raise its policy rate by 25 basis points on September 18 as the economy showed healthy growth alongside rising inflation, which stood at 1.9 per cent in July.