Kuala lumpur: The ringgit opened higher against the US dollar on Wednesday as the greenback weakened, while markets weighed the prospects of interest rate hikes in the United States and Japan. At 8 am, the local currency strengthened to 4.0560/0635 against the greenback from Tuesday's close of 4.0605/0640.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid indicated that higher US Treasury yields suggested the Federal Reserve could opt for a higher benchmark interest rate when the Federal Open Market Committee meets on September 15-16. He noted that the US Treasury notes auction for three-month and six-month bills yielded higher at 3.80 percent and 3.89 percent, respectively.
Mohd Afzanizam also observed that the Japanese yen strengthened against the US dollar to 153.53 yen, reflecting growing expectations that the Bank of Japan (BOJ) could raise its policy rate. This expectation is bolstered by signs of stronger economic performance, with the BOJ potentially raising its policy rate by 25 basis points on September 18, as the economy showed healthy growth alongside rising inflation, which stood at 1.9 percent in July.
Japan's second quarter of 2026 gross domestic product exceeded expectations with a 1.4 percent quarter-on-quarter annualized rate, compared to consensus estimates of 1.1 percent. Additionally, wage growth among Japanese employees accelerated to 4.7 percent year-on-year in July, surpassing market expectations of 3.9 percent.
Meanwhile, Quintex Intel global strategist Stephen Innes remarked that currency markets perceived an expected Fed rate move largely as an insurance hike rather than the start of a sustained tightening cycle. He added that investors believe this could be reversed quickly once tensions in West Asia ease and oil prices settle back towards the mid-US$80s per barrel, which may increasingly be viewed as the new normal.
The ringgit traded lower against most major currencies, slipping against the Japanese yen to 2.6437/6488 from 2.6374/6398, falling against the euro to 4.7167/7254 from 4.7151/7191, and easing against the British pound to 5.4934/5036 from 5.4926/4974. However, against regional currencies, the ringgit traded mostly higher, edging up against the Thai baht to 12.3241/3529 from 12.3285/3447, strengthening against the Philippine peso to 6.47/6.49 from 6.48/6.49, and rising against the Indonesian rupiah to 230.0/230.5 from 230.3/230.5. The local note softened against the Singapore dollar to 3.2081/2143 from 3.2073/2104 previously.