Kuala lumpur: The ringgit ended higher against the greenback on Wednesday, bolstered by softer US Treasury yields in anticipation of the US Federal Reserve's (Fed) Jackson Hole symposium. At 6 pm, the ringgit appreciated to 4.0240/0280 against the US dollar, compared to Monday's close of 4.0405/0440. The market was closed on Tuesday in observance of Prophet Muhammad's birthday.
According to BERNAMA News Agency, Quintex Intel global strategist Stephen Innes noted that the decrease in US Treasury yields contributed to a nearly half a per cent rise in the ringgit ahead of a significant US risk event. Innes highlighted the flow data, showing approximately RM3 billion in non-resident Malaysian bond accumulation on August 19, with RM2.1 billion in government bonds and RM950 million in corporate bonds. He suggested that the ringgit's movement was influenced by a favorable global environment and specific portfolio inflows into Malaysia.
The upcoming Jackson Hole symposium, scheduled from August 27-29, is under close scrutiny as it may provide investors with insights into the Fed's future interest rate decisions. A potential rate cut indicated by the Fed could weaken the US dollar, thereby boosting the ringgit.
Innes further commented on US Fed Chair Kevin Warsh's approach, emphasizing his reluctance to provide forward guidance, thereby leaving the market to gauge the Fed's reaction. With softer US inflation data and weaker retail sales, the market anticipates a less hawkish stance. However, Warsh's position at Jackson Hole remains uncertain and could sway market expectations.
Dr. Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, observed that the ringgit's appreciation against the US dollar was due to the diminished likelihood of a Fed interest rate hike in September. He also noted the US Treasury Department's intervention in the bond market, which suggests that a higher interest rate environment could adversely affect government finances. The focus now shifts to Warsh's speech at the Jackson Hole Symposium, where any insights into future interest rates could impact the ringgit positively.
The ringgit closed higher against a range of major currencies. It advanced against the Japanese yen, British pound, and euro compared to Monday's closing rates. Similarly, the ringgit showed strength against regional currencies, including the Singapore dollar, Indonesian rupiah, Philippine peso, and Thai baht.