Ringgit Tumbles as Fed Hikes Interest Rates for First Time in Two Years

The ringgit opened lower against the US dollar on Thursday after the Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75% to 4.00%, marking its first rate hike since 2023.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that the highly anticipated FOMC decision was met with a high degree of hawkishness, signaling that the Fed remains committed to tightening monetary policy to achieve price stability.

The move has driven the US dollar index (DXY) higher, hovering at 100.322 points, while two- and ten-year US Treasury yields rose seven and two basis points to 4.74% and 5.02%, respectively.

The ringgit is expected to trade lower against the US dollar today, possibly around 4.08 to 4.10, according to Dr Mohd Afzanizam.