Ringgit Tumbles on US Treasury Yield Surge and Fed Rate Uncertainty

The Malaysian ringgit began trading lower against the US dollar on Tuesday due to rising US Treasury yields and uncertainty surrounding the US Federal Reserve's interest rate outlook.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid pointed out that the 30-year US Treasury bond yield has been steadily increasing, reaching 5.25%, amid expectations that the Fed may maintain a cautious stance on interest rates at its upcoming meeting on September 15-16.

This development follows a speech by Fed chairman Kevin Warsh at the Jackson Hole Symposium, where he emphasized that inflation remains high while the labor market is healthy, potentially leading to higher interest rates. However, this contradicts the US Treasury department's goal of lowering long-term bond yields through its buyback plans.

Afzanizam also noted that the ringgit may remain cautious against the US dollar due to the resumption of military attacks between the US and Iran, which has pushed Brent crude prices higher to $90.49 per barrel.