Ringgit Retreats After Five-day Rally Amid Mixed Fed Signals

By Fatin Umairah Abdul Hamid

KUALA LUMPUR, Oct 30 (Bernama) -- The ringgit retreated against the US dollar at Thursday’s close after a five-day rally as traders and investors locked in profits amid mixed signals from the US Federal Reserve (Fed) on the pace of future interest rate cuts.

At 6 pm, the ringgit eased to 4.1935/1985 against the greenback from Wednesday’s close of 4.1850/1900. 

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said although the Fed had delivered a 25-basis-point rate cut, the decision was not unanimous.  

“One member voted to maintain the Fed Funds Rate, while another preferred a 50-basis-point reduction. It appears the ringgit has returned to its psychological level of RM4.20,” he told Bernama.

He added that the precondition for further ringgit appreciation depends largely on how quickly the Fed proceeds with additional rate cuts.

“Nonetheless, there remains upside potential for the ringgit, especially if the Fed is perceived to be behind the curve. This is particularly relevant given that the ongoing US government shutdown has limited the Federal Open Market Committee members’ access to key economic data needed for informed decision-making,” he said.

At the closing, the ringgit traded higher against most major currencies.

It rose against the Japanese yen to 2.7266/7300 from 2.7493/7528 at Wednesday's close, strengthened against the British pound to 5.5304/5370 from 5.5326/5392 and climbed versus the euro to 4.8716/8774 from 4.8722/8780.

The local note also traded mostly higher against ASEAN currencies.

It improved against the Singapore dollar to 3.2285/2326 from 3.2324/2365 at Wednesday’s close and inched up vis-a-vis the Thai baht to 12.9501/9723 from 12.9651/9858 but slipped against the Indonesian rupiah to 252.0/252.4 from 251.8/252.2, and was flat against the Philippine peso at 7.12/7.13 from 7.12/7.14 previously.

-- BERNAMA