KUALA LUMPUR (Sept 13): The ringgit slid further against the US dollar at the opening, due to increased demand for the greenback, as the US Federal Reserve (Fed) reaffirmed its commitment to keeping inflation under control, sustaining expectations of substantial interest rate hikes by the American central bank.
At 9.10am on Tuesday (Sept 13), the local currency had slid to 4.5030/5055 against the greenback, from 4.5010/5045 at Monday’s close.
ActivTrades trader Dyogenes Rodrigues Diniz said the greenback continued to rise against the ringgit, which is now trading above the 4.50 level.
Fed chairman Jerome Powell said he believes that US economic tightening will have few social consequences for the least well-off.
“Overall, this statement reiterates the Fed’s current position on a more restrictive monetary policy. This position should be maintained for some time, as employment data points to a strong job market and inflation remains high,” Diniz said.
He said the main effect of a systematic increase in the interest rate in the US is that it makes public debt securities increasingly appealing to investors.
“If you add to this the fact that US bonds are considered the safest in the world, this tends to create a constant flow of capital from other countries to the US, capital that gets converted from other currencies into US dollars, pushing the US currency higher against its counterparties,” he added.
Against a basket of major currencies, the ringgit was traded lower.
The local unit decreased against the Singapore dollar to 3.2263/2286 from Monday’s close at 3.2224/2251, and fell against the pound to 5.2658/2687 from 5.2549/2590 previously.
It eased against the euro to 4.5638/5663 from 4.5636/5671, and depreciated against the yen to 3.1596/1615 from 3.1526/1553.-BERNAMA