KUALA LUMPUR (May 5): The FBM KLCI fell 12.49 points or 0.8% while the ringgit weakened past the 4.0000 level against the US dollar 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 5pm, the KLCI closed at 1,645.09 points, dragged down by stocks like PPB Group Bhd and Genting Malaysia Bhd. PPB and Genting Malaysia was the top and 10th-largest decliner across Bursa Malaysia.

The ringgit depreciated to 4.0078 versus a stronger US dollar. Earlier, the ringgit depreciated to its intraday weakest level at 4.0199 against the US dollar.

FXTM chief market analyst Jameel Ahmad wrote in a note today the ringgit was showing progressive phases of recovery versus the US dollar as investors focused on the US monetary policy.

"What we are currently encountering when it comes to the Malaysian currency is that the ringgit is gradually moving through progressive phases of recovery against the dollar.

"This can still continue later in 2016 when you take into account that the markets have finally clued onto the fact that the Federal Reserve will not be raising interest rates as often as optimists were previously pricing into the dollar," Jameel said.

Mercury Securities Sdn Bhd research head Edmund Tham told theedgemarkets.com that crude oil prices, China economic data and the US dollar would be closely watched.

"The movement of US dollar will be closely watched as this will affect the currencies in the Asean region," Tham said.

Bursa Malaysia saw 415 decliners versus 332 advancers. A total of 1.4 billion shares valued at RM1.62 billion changed hands.

Top gainer was British American Tobacco (M) Bhd. Hiap Huat Holdings Bhd was the most-actively traded counter.

In China share markets, Hong Kong's Hang Seng fell 0.37% while Shanghai Composite rose 0.22%. Japan and South Korea markets were closed for holiday.

Reuters reported that most Southeast Asian stock markets fell on Thursday, led by the Philippines, as weak economic data and corporate earnings results added to concerns over global economic growth.