KUALA LUMPUR, March 17 — The ringgit further improved against the US dollar after the Federal Reserve raised interest rates for the first time since 2018 in an effort to tame inflation.
At 9am, the local currency stood stronger at 4.1815/1860 versus the greenback from 4.1965/1995 at Wednesday’s close.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the US Federal Open Market Committee (FOMC) members have decided to raise the Fed Fund Rate by 25 basis points, bringing the benchmark interest rate to 0.50 per cent.
He said judging from a recent forecast, it appears that the interest rate will continue to be raised by a quarter percentage point in each meeting throughout 2022.
‘’This could bring the Fed Fund Rate to 2.00 per cent by end of the year. The markets have been pricing in such a move and therefore, the equities market have reacted positively.
‘’This is given the fact that such monetary tightening is an indication that the economic activities are firming up, with the labour market has been showing good traction,’’ he told Bernama.
Mohd Afzanizam said the ringgit should perform well today in the range of RM4.18-RM4.19 level.
‘’Perhaps, hope for a possible hike in the overnight policy rate (OPR) at some point in the future could help strengthen the value of the ringgit,’’ he noted.
The currency market was also relieved as signs of progress in the Ukraine-Russia peace talks have lifted sentiment.
The ringgit was traded mixed against a basket of major currencies.
It strengthened against the Singapore dollar to 3.0798/0834 from 3.0823/0847 at Wednesday’s close and appreciated against the Japanese yen to 3.5174/5215 from 3.5461/5487.
However, the local unit declined against the British pound to 5.5008/5067 from 5.4790/4829 and lowered against the euro to 4.6197/6247 from 4.6111/6144 yesterday.
— Bernama
