Ringgit slips as US inflation fuels rate hike expectations
The US Dollar Index gained 0.36 per cent to 102.55 points after September inflation exceeded market forecasts, a Bank Muamalat economist said.
The ringgit began trading on Oct 15 at 4.0820/0865 per US dollar at 8 am, weaker than its previous closing level of 4.0805/0850, as unexpectedly strong US inflation figures reinforced expectations that the Federal Reserve (Fed) could raise interest rates.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said September headline inflation reached 3.7 per cent, up from 3.4 per cent in August and above the 3.6 per cent market forecast. Core inflation climbed from 2.4 per cent to 2.6 per cent, also exceeding expectations.
Mohd Afzanizam told Bernama that Chicago Fed President Austan Goolsbee had characterised the inflation numbers as discouraging and suggested officials consider a rate increase at the Oct 27-28 meeting. The economist said stronger expectations of a hike could add pressure on the ringgit.
His forecast put the dollar-ringgit trading range at RM4.08 to RM4.09 for Oct 15. However, he said Malaysia’s advance third-quarter gross domestic product estimate could offer support, with economic growth expected to remain around 5.0 per cent.
Other opening rates were mixed. Sterling bought 5.4005/4064 ringgit, compared with 5.4132/4192 at the previous close, marking a gain for the Malaysian currency. The ringgit weakened against the euro to 4.5694/5744 from 4.5673/5723, but strengthened against the Singapore dollar to 3.1794/1831 from 3.1829/1867.
