Ringgit Surges as US Rate Hike Odds Plummet
The Malaysian ringgit rose against major and regional currencies at the market close on Monday, as softer US economic data cooled expectations of a Federal Reserve interest rate hike in September.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam said that 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, according to Dr Afzanizam. 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.
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.