KUALA LUMPUR (Oct 29): The ringgit depreciated to 4.3140 against a strengthening US dollar on expectation the US may start raising interest rates this December. Such sentiment followed the conclusion of the US Federal Reserve's two-day meeting yesterday.

Today, the ringgit-US dollar exchange rate was the weakest so far. At 9:48am, the ringgit changed hands at 4.2955 versus the US dollar. A US interest rate rise does not bode well for Asian assets as investors turn their attention to US dollar-denominated entities.

Reuters reported that the Federal Reserve kept interest rates unchanged on Wednesday, but downplayed global economic headwinds and left the door open to tightening monetary policy at its next meeting in December.

Following a two-day policy meeting, the central bank said it was still monitoring economic and financial developments abroad, but did not repeat that global risks would have a likely impact on the US economy, as it warned at its last meeting in September.

In Malaysia today, MIDF Amanah Investment Bank Bhd said it maintained its view that the US could start raising interest rates this December.

In a note, MIDF said a US rate hike would result in the depreciation in emerging market currencies.

"We reiterate our expectation that the Fed will conduct an interest rate hike in December. Despite the Fed’s concern on inflation, they are still indicating that the longer-term inflationary expectations remain stable and both the economy and labour market has been relatively healthy.

"Taking all of the points into account, we believe the Fed is providing the market with a hint that they are planning to conduct an interest rate hike in December meeting. We expect this would put short-term pressure on emerging market currencies including Malaysia's (ringgit), where we are keeping our expectation that the ringgit will end year 2015 at 4.40–4.50 level," MIDF said.