Kuala lumpur: The ringgit concluded trading on a lower note against the US dollar on Thursday, as market sentiment remained cautious in anticipation of the US Federal Reserve's Jackson Hole symposium.
According to BERNAMA News Agency, the ringgit eased to 4.0305/0350 against the US dollar at 6 pm, compared to Wednesday's closing rate of 4.0240/0280. Bank Muamalat Malaysia Bhd's chief economist, Dr. Mohd Afzanizam Abdul Rashid, highlighted that traders are closely monitoring US Fed chair Kevin Warsh's upcoming speech at the symposium for insights into potential decisions at the Federal Open Market Committee (FOMC) meeting scheduled for September 15-16.
He pointed out that the US government's current debt level of US$40.1 trillion, along with increasing Treasury yields, could result in higher debt servicing costs. Dr. Afzanizam noted the significance of Warsh's speech regarding the interplay between monetary and fiscal policies and their effects on the US government. He suggested that the Fed Funds Rate may remain unchanged at its present level of 3.50-3.75 per cent, which could provide support for the ringgit in the near term.
The Jackson Hole symposium, held from August 27-29, is a key event for investors seeking clues about the Fed's future interest rate moves. A potential rate cut hint from the Fed could weaken the US dollar, benefiting the ringgit.
Meanwhile, Quintex Intel's global strategist Stephen Innes emphasized that the primary focus of the symposium would be Warsh's speech at 10 am Eastern Time on Friday. Traders are expected to remain cautious, as the tone of the speech will likely determine whether the US dollar continues its recent recovery or loses steam. The ringgit's slight weakening was attributed to a firmer-than-expected US core inflation reading, which revived expectations of a potential Fed rate hike, particularly in December. Although the shift was modest, it was sufficient to impact the ringgit in the current low-volatility foreign exchange market.
At the close of trading, the ringgit strengthened against a basket of major currencies. It appreciated against the Japanese yen, British pound, and euro. However, it traded mixed against regional currencies, edging down against the Singapore dollar and Indonesian rupiah, while gaining ground against the Philippine peso and Thai baht.