Ringgit opens slightly lower after hawkish FOMC outcome

The ringgit opened lower against the US dollar on Thursday as the greenback strengthened following a hawkish outcome from the US Federal Open Market Committee (FOMC) meeting overnight.

At 8am, the local currency eased to 4.0855/4.0910 against the greenback from Tuesday’s close of 4.0835/4.0880.

The US Federal Reserve (Fed) raised its benchmark interest rate by 25 basis points to a target range of 3.75% to 4.00%, which it had previously forecast at 3.50% to 3.75%, marking its first rate hike since 2023.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the highly anticipated FOMC decision was met with a high degree of hawkishness, signalling that the Fed remains committed to tightening monetary policy to achieve price stability.

“The Fed chair indicated during his press conference that the monetary policy stance is expected to be more restrictive and that they are serious about meeting one of its dual mandates, namely price stability.

“The quarterly projection by the Fed staff also showed there will be another quarter-point rate hike this year,” he added.

He noted that the move has helped to drive the US dollar higher, with the US dollar index (DXY) hovering at 100.322 points, while the two- and ten-year US Treasury yields rose seven and two basis points to 4.74% and 5.02%, respectively.

On that note, Afzanizam said the ringgit is expected to trade lower against the US dollar today, possibly around 4.08 to 4.10.

At the opening, the ringgit was higher against a basket of major currencies.

It improved against the euro to 4.6853/4.6916 from Tuesday’s close of 4.7111/4.7163, rose against the yen to 2.6182/2.6219 from 2.6366/2.6396, and inched up against the British pound to 5.4672/5.4746 from 5.5037/5.5098.

The ringgit traded mixed against its Asean peers.

The ringgit leapt against the Singapore dollar to 3.1965/3.2013 from 3.2093/3.2131 previously, and increased against the Thai baht to 12.2265/12.2485 from 12.2620/12.2800 at Tuesday’s close.

The local note was marginally lower against the Indonesian rupiah at 230.8/231.2 from 230.7/231.1 and edged down vis-a-vis the Philippine peso to 6.51/6.52 from 6.50/6.51 previously.

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