Kuala lumpur: The ringgit ended lower against the US dollar today as expectations for a US interest rate cut have been significantly reduced, signalling the markets remain unconvinced of another rate cut in the December meeting. At 6 pm, the ringgit eased to 4.1565/1645 versus the greenback from yesterday’s close of 4.1480/1530.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd’s chief economist Dr Mohd Afzanizam Abdul Rashid noted that the lack of significant data points has heightened policy uncertainties, thereby supporting the value of the US dollar in the near term. He pointed out that the US Dollar Index (DXY) is slightly above 100 points as the anticipated economic data post-reopening of the US government has not been forthcoming. Additionally, Federal Reserve officials have shown reluctance to cut interest rates.
Meanwhile, SPI Asset Management managing partner Stephen Innes observed that the ringgit weakened today following the limited US economic data. This prompted a reduction in the odds of a December Fed rate cut from approximately 50 percent to roughly 30 percent, causing front-end US yields to rise as traders adjusted to the reduced likelihood of near-term easing. Innes emphasized that the widening US-Malaysia rate differential, due to stronger US growth and fewer expected rate cuts, is pulling capital towards the dollar and away from regional currencies.
Innes further mentioned that the market is anticipating a delayed September non-farm payrolls (NFP) report, and any signs of weakness could lead to the ringgit opening stronger tomorrow. Despite today’s downturn against the US dollar, the ringgit closed higher against a basket of major currencies.
The ringgit appreciated against the yen to 2.6446/6498 from 2.6598/6632 at Wednesday’s close, strengthened against the euro to 4.7916/8008 from 4.8013/8071 yesterday, and rose against the British pound to 5.4367/4472 from 5.4451/4516 previously. The ringgit showed mixed performance against ASEAN currencies, inching up against the Singapore dollar to 3.1809/1873 from 3.1810/1851, but declining against the Thai baht to 12.8093/8395 from 12.7977/8191, weakening against the Indonesian rupiah to 248.3/248.9 from 248.2/248.6, and remaining flat against the Philippine peso at 7.04/7.05.