Ringgit vs US Dollar: Rate Surpasses 4.20 Amid Interest Rate Cut Expectations
- The malaysian ringgit strengthened against major currencies on September 12, 2024, driven by expectations of an upcoming interest rate cut by the US Federal Reserve (Fed) and weakening...
- zanizam Abdul Rashid, as reported by Bernama, attributed the ringgit's positive performance to the anticipation surrounding the Federal Open Market Committee (FOMC) meeting scheduled for September 16-17, 2024.
- Stephen Innes, managing director of SPI Asset Management, highlighted the role of recent US economic data.
Ringgit Gains on Anticipation of US Federal Reserve Rate Cut
Table of Contents
The malaysian ringgit strengthened against major currencies on September 12, 2024, driven by expectations of an upcoming interest rate cut by the US Federal Reserve (Fed) and weakening US labor market data.
Factors Driving Ringgit appreciation
zanizam Abdul Rashid, as reported by Bernama, attributed the ringgit’s positive performance to the anticipation surrounding the Federal Open Market Committee (FOMC) meeting scheduled for September 16-17, 2024. The market widely expects a 25 basis points (bps) reduction in interest rates at this meeting.
Stephen Innes, managing director of SPI Asset Management, highlighted the role of recent US economic data. Specifically, weaker US labor signals contributed to a decline in the US dollar, further boosting the ringgit. Markets largely dismissed a 0.3% increase in US inflation for august, focusing rather on the deteriorating employment figures.
US Economic Data and Rate Cut Expectations
A rise in US jobless claims last week considerably increased expectations for a Fed rate cut.Traders are now pricing in a total of 72 bps of Fed easing for the remainder of 2024 and throughout 2025, an increase from the 68 bps anticipated before the data release. This shift in expectations reflects growing concerns about the US economic outlook.
Ringgit Performance against Major Currencies (September 12, 2024)
| Currency | September 12, 2024 (MYR/Unit) | September 11, 2024 (MYR/Unit) |
|---|---|---|
| Euro | 4.9203/9326 | 4.9293/9357 |
| Japanese Yen | 2.8373/8446 | 2.8509/8548 |
| British Pound | 5.6864/7006 | 5.6954/7028 |
| Singapore Dollar | 3.2719/2803 | 3.2829/2874 |
| Thai Baht | 13.2317/2703 | 13.2432/2663 |
| Indonesian Rupiah | 256.3/257.0 | 256.2/256.7 |
| Philippine Peso | 7.35/7.37 | 7.37/7.39 |
The ringgit demonstrated gains against most ASEAN currencies, with the exception of a slight easing against the Indonesian Rupiah.