KUALA LUMPUR (July 1): The ringgit strengthened to its firmest intraday level against the US dollar at 3.9845 on expectation that the US may delay interest rate  hikes.

US interest rate sentiment comes amid economic and financial market uncertainties after the UK's European Union (EU) exit (Brexit) decision.
 
At 9:33am, the ringgit strengthened to 3.9935 against the US dollar. The exchange rate so far today was between 3.9845 and 4.0175.

The ringgit appreciated against a weakening US dollar. The US Dollar Index, which measures the US dollar's value against a basket of currencies, fell to 95.826 at 9:28am.

MIDF Amanah Investment Bank Bhd wrote in a note that Brexit sentiment could have prompted investors to shift their funds back into emerging market bonds amid lower expectation of US interest rate hikes this year.

Such sentiment could have resulted in demand for emerging market currencies like the ringgit.

"Recall that last year, ringgit has been depreciating against USD as investors were expecting the Fed (Federal Reserve) to begin tightening their monetary policy. Although the pace of rate hike has been slower than what was initially expected, the expectation that the US Federal Reserve would tighten their interest rate gradually remains. 

"However, since the EU referendum decided on a Brexit, traders are no longer expecting the Fed to increase their interest rate this year," MIDF said.