Ringgit opens lower on renewed US rate increase expectations

The ringgit opened lower against the US dollar on Thursday as stronger-than-expected US inflation data bolstered expectations of a possible interest rate increase by the US Federal Reserve (Fed), lending support to the greenback.

At 8am, the ringgit edged down to 4.0820/4.0865 against the US dollar from Wednesday’s close of 4.0805/4.0850.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the US Dollar Index (DXY) rose 0.36% to 102.55 points after headline inflation accelerated to 3.7% in September from 3.4% in August, exceeding the market consensus of 3.6%.

He said core inflation also increased to 2.6% in September from 2.4% in August, surpassing the consensus estimate of 2.4%.

Higher gasoline prices were the main driver, with the transport sub-index rising to 7.9% in September from 6.2% in August.

“Following the inflation data, Chicago Fed President Austan Goolsbee described the figures as discouraging, suggesting that Fed officials should consider raising the federal funds rate at their upcoming meeting on Oct 27-28,” he noted.

Afzanizam said the latest developments had strengthened expectations of a US rate hike, potentially putting further pressure on the ringgit.

“As such, we expect the US dollar-ringgit pair to trade within the RM4.08 to RM4.09 range today as expectations of a US rate increase gain momentum,” he said.

Nevertheless, he said Malaysia’s advance estimate of gross domestic product growth for the third quarter of 2026 could provide some support to the local currency.

He expects the Malaysian economy to maintain growth of around 5.0%.

“Such a growth trajectory could support a possible normalisation of the Overnight Policy Rate (OPR) at some point in the future,” he added.

At the opening, the ringgit traded mostly lower against major currencies.

It strengthened against the British pound to 5.4005/5.4064 from 5.4132/5.4192 at Wednesday’s close, but weakened against the Japanese yen to 2.5840/2.5870 from 2.5751/2.5781. It also edged lower against the euro to 4.5694/4.5744 from 4.5673/4.5723.

Against its Asean peers, the ringgit traded mostly higher.

The local currency edged up against the Singapore dollar to 3.1794/3.1831 from 3.1829/3.1867 at Wednesday’s close and strengthened against the Thai baht to 12.1365/12.1586 from 12.1498/12.1672. It also rose against the Philippine peso to 6.49/6.50 from 6.50/6.51.

However, it edged lower against the Indonesian rupiah to 228.0/228.3 from 227.9/228.2.

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