Accra:The ringgit opened lower against the US dollar on Thursday, influenced by stronger-than-expected US inflation data that heightened expectations of a potential interest rate increase by the US Federal Reserve, thereby supporting the greenback.
According to BERNAMA News Agency, at 8 am, the ringgit declined to 4.0820/0865 against the US dollar from the previous day's close of 4.0805/0850. Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid highlighted that the US Dollar Index (DXY) increased by 0.36 percent to 102.55 points after headline inflation rose to 3.7 percent in September from 3.4 percent in August, surpassing the market consensus of 3.6 percent.
Core inflation also saw an increase, rising to 2.6 percent in September from 2.4 percent in August, exceeding the consensus estimate of 2.4 percent. Higher gasoline prices were the primary contributor, with the transport sub-index increasing to 7.9 percent in September from 6.2 percent in August. Following the inflation data, Chicago Fed President Austan Goolsbee described the figures as discouraging, suggesting that Fed officials may consider raising the federal funds rate at their upcoming meeting on October 27-28.
Dr. Mohd Afzanizam noted that these developments have reinforced expectations of a US rate hike, which could further pressure the ringgit. He anticipates the US dollar-ringgit pair to trade within the RM4.08 to RM4.09 range as expectations of a US rate increase gain momentum. However, he mentioned that Malaysia's advance estimate of gross domestic product growth for the third quarter of 2026 could provide some support to the local currency, expecting the Malaysian economy to maintain growth around 5.0 percent.
At the market opening, the ringgit mostly weakened against major currencies. It strengthened against the British pound to 5.4005/4064 from 5.4132/4192 but weakened against the Japanese yen to 2.5840/5870 from 2.5751/5781, and also declined against the euro to 4.5694/5744 from 4.5673/5723. Against ASEAN currencies, the ringgit traded mostly higher, edging up against the Singapore dollar to 3.1794/1831 from 3.1829/1867, strengthening against the Thai baht to 12.1365/1586 from 12.1498/1672, and rising against the Philippine peso to 6.49/6.50 from 6.50/6.51. However, it edged lower against the Indonesian rupiah to 228.0/228.3 from 227.9/228.2.