The Malaysian ringgit weakened against the US dollar today following the Federal Reserve's decision to cut interest rates. However, it strengthened against currencies such as the British pound, euro, Japanese yen, Singapore dollar, and Thai baht.
The Malaysian ringgit weakened 0.4% against the US dollar today, reaching 4.4850/4.4925, as the US Dollar Index climbed to 108.142 points following the US Federal Reserve 's decision to cut the Fed Funds Rate by 25 basis points. Despite this, the ringgit strengthened when compared to a basket of currencies, including those from ASEAN nations. Bank Muamalat Malaysia Bhd chief economist Dr.
Mohd Afzanizam Abdul Rashid stated that the dollar-ringgit is approaching its immediate resistance level of 4.5339 due to increased demand for the US dollar resulting from a hawkish Fed. He also noted that the Fed's forecast for 2025 anticipates a decrease in the benchmark rate by 25 to 50 basis points, compared to the 100 basis points cut predicted in September. Furthermore, the Fed raised its estimate of the neutral rate to 3.0% from 2.9%. Dr. Mohd Afzanizam indicated that the Fed perceives the balance of risks between growth and inflation as relatively even and that they are keen to cut rates further but remain cautious about inflation risks. He added that the Fed's decision-making process does not currently consider potential scenarios related to a 'Trump 2.0'. Overall, Dr. Mohd Afzanizam believes that the US Dollar will remain strong, leading to a weaker ringgit in the near future. The ringgit performed better against the British pound, rising to 5.6376/5.6471 from yesterday's 5.6673/5.6743. It also strengthened against the euro to 4.6442/4.6520 from 4.6877/4.6934 and against the Japanese yen to 2.8992/2.9044 from 2.9028/2.9059. The ringgit appreciated further against the Singapore dollar to 3.2903/3.2963 from 3.3045/3.3088 and rose against the Thai baht to 12.9598/12.9916 from 13.0378/13.0618
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