Ringgit opens higher against US$ amid rate-hike expectations
The Malaysian ringgit strengthened against the US dollar as markets anticipate potential interest rate hikes from the Federal Reserve and the Bank of Japan. Economists suggest that positive economic data in Japan and US Treasury yields are driving these currency fluctuations.
Why it matters
Currency volatility and central bank policy shifts significantly impact emerging market economies and global trade dynamics.
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.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said higher US Treasury yields suggested that the Federal Reserve could opt for a higher benchmark interest rate when the Federal Open Market Committee (FOMC) meets on Sept 15-16.
"The US Treasury notes auction for three-month and six-month bills yielded higher at 3.80 per cent and 3.89 per cent, respectively,” he told Bernama.
Mohd Afzanizam also said 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, supported by signs of stronger economic performance.
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