Ringgit Rises as US Economic Data Dampens Rate Hike Expectations

The Malaysian ringgit closed higher against major and regional currencies on Monday, including the US dollar, as softer US economic data dampened expectations of a Federal Reserve interest rate hike in September.

The ringgit jumped 225 percentage-in-points (pips) to 4.0585/0630 versus the US dollar from last Friday's close of 4.0840/0885.

According to Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam, the lower US consumer price index (CPI) and weaker jobs data last week appeared to ease expectations of a potential rate hike by the Fed next month.

The odds for a rate hike in September have gone down to 30 per cent from more than 50 per cent a month ago, Dr Afzanizam said. In that sense, sentiments over a rate hike in the Fed Funds Rate have shifted, and this could provide support to the ringgit in the immediate term.