KUALA LUMPUR: The ringgit ended lower against the greenback on Thursday amid cautious sentiment ahead of the US Federal Reserve’s (Fed) Jackson Hole symposium.
At 6 pm, the ringgit eased to 4.0305/0350 against the US dollar from Wednesday’s close of 4.0240/0280.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said traders would scrutinise US Fed chair Kevin Warsh’s speech at the Jackson Hole symposium tomorrow for clues on the Fed’s possible decision at the upcoming Federal Open Market Committee (FOMC) meeting on Sept 15-16.
He said the US government’s debt, which currently stands at US$40.1 trillion, coupled with rising Treasury yields, would result in higher debt servicing costs.
“Hence, it will be interesting to see how Warsh shares his take on the intricacies between monetary and fiscal policies and their impact on the US government.
“The way we see it, this could lead to the status quo to the prevailing Fed Funds Rate level of 3.50-3.75 per cent. Hence, the ringgit should be well supported in the near term,” he told Bernama.
The Jackson Hole symposium, which takes place from Aug 27-29, is closely watched because it could give investors clues on the Fed’s next move on interest rates. If the Fed hints at cutting rates, the US dollar could weaken, giving the ringgit a boost.
Meanwhile, Quintex Intel global strategist Stephen Innes said the main focus of the Jackson Hole symposium would be Warsh’s speech at 10 am Eastern Time on Friday, with traders staying cautious as its tone will likely determine whether the US dollar extends its recent rebound or loses momentum.
“The ringgit’s slight weakening was mainly due to the slightly firmer-than-expected US core inflation reading which revived expectations of a Fed rate hike, particularly in December.
“The shift was modest but in the current low-volatility foreign exchange market, it was enough to weigh on the ringgit,” he said.
At the close, the ringgit ended higher against a basket of major currencies.
It gained versus the Japanese yen to 2.5274/5304 from 2.5308/5335 at Wednesday’s close, increased against the British pound to 5.4714/4775 from 5.4827/4882 yesterday and appreciated vis-à-vis the euro to 4.6919/6971 from 4.6940/6987 previously.
The local note traded mixed against regional currencies.
It edged down vis-à-vis the Singapore dollar to 3.1686/1724 from 3.1683/1717 on Wednesday and slipped versus the Indonesian rupiah to 227.1/227.5 from 227.0/227.3.
However, the local note appreciated against the Philippine peso to 6.51/6.53 from 6.52/6.54 yesterday and improved against the Thai baht to 12.2534/2715 from 12.2791/2959 previously. – Bernama
