Ringgit Slumps Amid US Rate Hike Expectations
The Malaysian ringgit fell against the US dollar on its first trading day in September due to expectations of a US interest rate hike. The currency's value dropped to 4.0370/0410 against the greenback, down from last Friday's close of 4.0230/0270.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid attributed this decline to Federal Reserve Chair Kevin Warsh's recent speech at the Jackson Hole Symposium. He stated that markets are focusing on Warsh's concern over inflation, which implies that monetary tightening is almost inevitable in the near term.
Warsh's comments led to a two-day meeting of the Federal Open Market Committee (FOMC) beginning September 15, fueling expectations of a rate hike. This development has had a significant impact on currency markets worldwide.