Ringgit Suffers as US Rate Hike Odds Skyrocket Ahead of FOMC Meeting

The Malaysian ringgit weakened against several major currencies on Tuesday as investors remained cautious ahead of the US Federal Open Market Committee's (FOMC) two-day meeting, which began that evening. The local currency dipped to 4.0835/0880 against the greenback from Monday's close of 4.0735/0770.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the odds for a US rate hike this week were reportedly at 92.3 per cent based on data from CME FedWatch, a tool by the Chicago Mercantile Exchange (CME Group) that shows market expectations for the US Federal Reserve's interest-rate decisions.

The US Dollar Index rose 0.25 per cent to 99.641 points while the 10-year US Treasury note yield surpassed the 5.00 per cent level, further impacting Asian currencies such as the Indonesian rupiah, Thai baht and Singapore dollar, which were also weaker against the greenback.