KUALA LUMPUR (Dec 19): The weakening of the ringgit against the US dollar continued as it dipped to 4.4797 amid prevailing optimism over the US economy against the backdrop of the interest rate hike by the Federal Reserve (Fed) on Wednesday.

The US Dollar Index, which measures the greenback's value against a basket of currencies, dipped 0.24% to 102.71 at press time.

Reuters reported that the dollar edged lower in early Asian trading on Monday as some investors took profits after its rise last week to a 14-year peak against a currency basket, though it remained underpinned by expectation of more US interest hikes in the coming year.

The Fed's interest rate forecasts released on Wednesday after its widely expected rate increase showed three more hikes 2017, which fueled the dollar's rise to last week's highs, Reuters wrote.

Year to date, the ringgit has fallen 4.3% to depths only seen in the 1998 Asian Financial Crisis, when it plunged to 4.19 and was "rescued" through being pegged at 3.80 against the dollar.

Against the Singapore dollar, the ringgit strengthened by 0.09% to 3.1007, after paring losses.

"The dollar will remain elevated for some time as optimism over the US economy carries on, boosted by the rate hike and President-elect Donald Trump's impending fiscal expansionary policy," said an economist with MIDF Research.

He told theedgemarkets.com that the ringgit's saving factor would be Bank Negara Malaysia's foreign exchange policy and its cap on non-deliverable forwards (NDFs).

"Although the crude oil prices are favourable to the ringgit and would encourage investment, there are many factors that are causing fund outflow such as the optimism on the US economy," he added.

At the time of writing, the Western Texas Intermediate's January 2017 futures were trading up 0.77% at US$52.30 per barrel, and February 2017 futures for Brent Crude rose 0.62% to US$55.55 per barrel.