Ringgit Continues To Extend Loss On Fed’s Hawkish Turn

By Abdul Hamid A Rahman

KUALA LUMPUR, Dec 19 (Bernama) -- The ringgit ended lower against the US dollar on Thursday, continuing its decline after the US Federal Reserve (Fed) signalled a more cautious approach to rate cuts next year, following a 25-basis-point reduction on Wednesday.

At 6 pm, the local currency depreciated to 4.5030/5080 against the greenback, compared to Wednesday’s close of 4.4670/4725.

SPI Asset Management managing partner Stephen Innes said the Fed's rate cut was accompanied by a cautious tone, suggesting that further reductions in 2025 could be limited, which weighed on market sentiment.

“The ringgit initially showed some resilience today, supported by optimism over Malaysia's improving economic outlook. However, broader market forces weighed on the local currency later in the day,” he told Bernama. 

He reckons that the existing interest rate differentials between Malaysia and the United States, along with the looming tariffs on China, being one of Malaysia’s key trading partners, could present a bearish outlook for the ringgit. “The continued resilience of the US economy, coupled with persistent inflation, has heightened speculation that the Fed may limit its rate cuts in 2025. These factors are expected to drive the US dollar higher,” he added.

The ringgit was traded mixed against other major currencies.

It jumped against the Japanese yen to 2.8687/8723 from 2.9074/9112 but dipped against the British pound to 5.6999/7062 from 5.6673/6743 and was almost flat against the euro at 4.6876/6928 from 4.6877/6934 at yesterday’s close.

The ringgit traded mixed against ASEAN currencies.

It appreciated against the Thai baht to 13.0322/0530 from 13.0378/0618 and perked up against the Indonesian rupiah to 276.0/276.4 from 277.4/277.9 on Wednesday.

The local note fell against the Singapore dollar to 3.3130/3169 versus 3.3045/3088 and dropped vis-à-vis the Philippine peso to 7.63/7.64 from 7.57/7.58 previously.

-- BERNAMA