KUALA LUMPUR (June 17): The ringgit lost its ground against the US dollar at the opening today as the greenback surged after the US Federal Reserve (Fed) hinted at raising interest rates in 2023.
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At 9am, the local note had fallen to 4.1360/1385 versus the greenback, erasing 0.5% or 205 basis points (bps) from 4.1155/1180 at yesterday’s close.
Describing the Fed’s rate hikes signal as a “hawkish surprise”, a dealer said the news caused capital outflows from emerging markets, including Malaysia, hence their currencies depreciated against the greenback.
Nevertheless, he viewed that the Fed’s decision to maintain interest rates at the current level of 0%-0.25% during the two-day Federal Open Market Committee (FOMC) meeting, which ended early today, as a widely expected move.
Although the ringgit was hampered by the US interest rate news, the dealer said the retreat, however, was capped by the Malay Rulers’ decision that there is no necessity to place the country under the the state of emergency rule after Aug 1, 2021, hence boosting investor confidence in the country.
Keeper of the Rulers’ Seal Tan Sri Syed Danial Syed Ahmad, in a statement, said the Malay Rulers, who attended a special meeting at Istana Negara yesterday, also supported Yang di-Pertuan Agong Sultan Al-Abdullah Al-Mustafa Ri’ayatuddin Billah Shah’s call for Parliament to reconvene as soon as possible.
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The Malay Rulers said the check-and-balance mechanism among the executives, legislative and judiciary must be respected.
At the opening, the ringgit was firmer against a basket of major currencies.
It rose against the pound to 5.7801/7836 from 5.8090/8126 at yesterday’s close, and strengthened against the euro to 4.9582/9612 from 4.9896/9927 yesterday.
The local unit was higher against the Singapore dollar at 3.0953/0974 versus 3.1032/1053, and improved vis-a-vis the yen to 3.7342/7368 from 3.7431/7453.-BERNAMA