KUALA LUMPUR (March 30): The FBM KLCI gained 2.78 points or 0.2% as the ringgit strengthened after the US Federal Reserve Chair Janet Yellen said the central bank should be cautious in its interest rate hike assessment.

US interest rate hikes do not bode well for Asian markets, in anticipation of capital flow back to US dollar-based assets.

In Malaysia, the KLCI closed at 1,717.51 points at 5pm, while the ringgit strengthened to 3.9353 against the US dollar.

The KLCI pared gains after reaching an intraday high at 1,724.13. The ringgit was traded between 3.9180 and 3.9757 against the US dollar today.

Across Asian share markets, Hong Kong's Hang Seng gained 2.15%, while South Korea's Kospi advanced 0.36%.

Japan’s Nikkei 225 however, fell 1.31% amid a stronger yen against the US dollar. A firmer yen is deemed a bane for Japanese exporters, as it makes the nation's exports more expensive.

Reuters reported Asian shares rallied on Wednesday, as markets pared back expectations for how fast and how far US interest rates might rise this year, bruising the dollar and boosting sovereign bonds.

The shift came after Yellen emphasised global dangers to growth and inflation, and thus the need to proceed "cautiously" on policy tightening.

In Malaysia, Areca Capital Sdn Bhd chief executive officer Danny Wong told theedgemarkets.com that the KLCI might have been supported by stronger commodity prices, due to the weaker US dollar.

“Ringgit has been very strong lately; not only that, the local market has also been seeing more foreign fund inflow,” Wong said.

In Malaysia, Bursa Malaysia saw 433 gainers and 351 decliners. Trading volume was 1.85 billion shares, worth RM2.34 billion.

Top gainer was Dutch Lady Milk Industries Bhd, while the biggest decliner was British American Tobacco (M) Bhd. Meanwhile, Sona Petroleum Bhd warrants were the most-actively-traded counter.