KUALA LUMPUR (May 6): The ringgit depreciated further against a strengthening US dollar after US policy makers indicated the Federal Reserve might increase interest rates next month. 

Higher US interest rates do not augur well for emerging Asian markets like Malaysia in anticipation that investors will shift their funds back to US dollar-based assets.

At 10:07am, the ringgit weakened to 4.0135 against the US dollar. The exchange rate so far today was between 4.0045 and 4.0190.

Yesterday, the ringgit depreciated to 4.0078 versus the US dollar.

Over the last one year, the ringgit had traded between 3.5608 and 4.4812 versus the US dollar. On March 29 this year, the ringgit strengthened past the 4.0000 mark to 3.9925. 

Today, the US Dollar Index, which measures the US dollar's value against major global currrencies, stood at 93.749 at 10:02am. Last Monday, the index was at 92.626.

Reuters reported today that St. Louis Federal Reserve President James Bullard said on Thursday the Fed could raise rates at its meeting next month if the economic data calls for it, despite the fact that traders see only a slim chance of it happening.

"We've got our options open," Bullard said in an interview on the sidelines of a conference here. "I would expect market probabilities will change if the data changes." 

In Malaysia, the stock market extended losses as the ringgit weakened. 

At 10:18am, the FBM KLCI fell 7.96 points to 1,637.13 after declining 12.49 points yesterday.

Today, BIMB Securities Sdn Bhd wrote in a note that Malaysian 
share-trade data showed that foreign institutional investors were net sellers while local retail and institutional investors were net buyers.

"We expect the local market to trade sideways today following the Wall Street and European equities overnight (data) with a support at 1,640.00," BIMB said.