Ringgit Slides to 4.0835 as Fed Rate Hike Bets Lift Dollar
The Malaysian currency weakened against the US dollar on September 24. Strong US economic data and Fed policy expectations drove the decline.
Key points
- Ringgit opened at 4.0835 per US dollar, down from 4.0780 the previous day.
- US Dollar Index rose 0.49% to 101.096 amid strong September PMI data.
- US 10-year Treasury yields jumped 15 basis points to 5.11 percent.
The ringgit fell to 4.0835 against the US dollar on September 24. This drop followed stronger US economic data and rising expectations for further Federal Reserve interest rate hikes.
The currency opened lower from the previous close of 4.0780. Bank Muamalat Malaysia Bhd economist Dr Mohd Afzanizam Abdul Rashid attributed the move to robust US business sentiment.
US Economic Data Strengthens Dollar
The US Dollar Index rose 0.49 percent to 101.096. This gain reflected a surge in business activity across the American economy during the same period.
The US Composite Purchasing Managers’ Index Output Index hit 58.4 points in September. This figure marks the highest level recorded in 62 months, indicating strong growth.
US Fed Governor Michael Barr suggested the central bank may resume raising rates. Such signals typically increase demand for the US dollar in global markets.
Treasury Yields Jump on Rate Expectations
Two-year US Treasury yields increased by 14 basis points to 4.85 percent. Higher yields make US debt more attractive to international investors.
Ten-year Treasury yields climbed 15 basis points to reach 5.11 percent. These moves reflect market confidence in continued monetary tightening by the Fed.
Ringgit Trades Mixed Against Peers
The ringgit strengthened against the euro, British pound, and Japanese yen. It moved to 4.6482 against the euro and 5.4061 against the pound.
Against the Japanese yen, the currency advanced to 2.5802 from 2.5836. The local note also appreciated against the Singapore dollar and Thai baht.
