Ringgit to Come Under Pressure as US Interest Rate Hike Chances Rise

The ringgit and regional currencies are expected to come under pressure next week as strong US jobs data bolsters the greenback. The local currency is seen trading between RM4.04 and RM4.06 against the US dollar.

This comes after the stronger-than-expected US non-farm payrolls (NFP) data released overnight increased the chances of a US interest rate hike, bolstering the greenback. Market attention will continue to centre on upcoming US economic data, particularly the Consumer Price Index (CPI) report next Friday.

The strong NFP outturn during August suggests that the Fed is likely to raise its benchmark interest rate in the upcoming FOMC meeting on Sept 15 and Sept 16, according to Dr Mohd Afzanizam Abdul Rashid, chief economist of Bank Muamalat Malaysia Bhd. The NFP came in at 162,000 in August, well above the consensus forecast of 55,000.

The ringgit weakened against the greenback to 4.0425/0465 from 4.0230/0270 a week earlier on a Friday-to-Friday basis. It also traded mostly lower against ASEAN currencies, but strengthened against the Philippine peso to 6.46/6.47 from 6.54/6.55 a week earlier.