Thursday 28 Mar 2024
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KUALA LUMPUR (May 5): The ringgit weakened past the 4.0000 level against a strengthening US dollar today after US policy makers indicated the Federal Reserve might raise interest rates next month. 

Higher US interest rates do not bode well for emerging Asian markets like Malaysia as investors shift their money back to US dollar-denominated assets.

At 9:40am, the ringgit weakened to 4.0055 against the US dollar.

The exchange rate so far today was between 4.0015 and 4.0199.

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. 

The US Dollar Index, which measures the US dollar's value against major global currencies rose to 93.232 at 9:29am today from 93.179 yesterday.

Today, Bloomberg reported that the dollar solidified its rebound, dominating Asian emerging-market currencies after Federal Reserve officials floated the possibility of higher interest rates next month. Chinese index futures signalled losses, while Australian stocks rallied with oil and gold.

Forward contracts on the Korean won and Indonesian rupiah slipped with local markets in both countries closed with those in Japan and Thailand Thursday. Malaysia’s ringgit sank to its lowest level since the end of March, even as US crude extended gains into a second day.

In Malaysia, Affin Hwang Investment Bank Bhd retail research head Datuk Dr Nazri Khan said the firm expected Malaysian markets to take the cue from the US and Japan's monetary policies.

Such sentiment could have impacted the Malaysian share market today. At 10:15am, the FBM KLCI fell 10.7 points to 1,646.88

Nazri wrote in a note today: "Overall, we reiterate our view that the local bourse will trend lower temporarily to correct its overbought situation."

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