Ringgit Surges as Fed Rate Hike Odds Slip to 30%

The ringgit surged against the US dollar on Monday as softer US economic data reduced expectations of a Federal Reserve interest rate hike in September. The local currency jumped 225 pips to 4.0585/4.0630 versus the greenback from last Friday's close of 4.0840/4.0885.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid attributed the ringgit's gain to lower US consumer price and producer price indices, as well as weaker jobs data last week.

According to Rashid, 'the odds for a rate hike in September have gone down to 30% from more than 50% a month ago. 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.'