Ringgit Surges Against US Dollar After Fed Rate Cut

The ringgit opened at 4.38 against the US dollar on Friday, following the US Federal Reserve’s decision to lower interest rates by 25 basis points during its Federal Open Market Committee (FOMC) meeting. By 8 am, the ringgit strengthened to 4.3860/4100 from the previous day’s closing rate of 4.4020/4065.

Ringgit Strengthens After Fed Cut

Dr. Mohd Afzanizam Abdul Rashid, Chief Economist at Bank Muamalat Malaysia Bhd, explained that the Fed Funds Rate is currently between 4.50% and 4.75%. Meanwhile, the 10-year US Treasury yield decreased by 11 basis points to 4.31%, and the US Dollar Index (DXY) dropped by 0.55% to 104.508 points.

The Fed’s rate cut came despite the uncertainties around US President-elect Donald Trump’s policies, which are expected to be inflationary. The Fed’s current restrictive stance on monetary policy has created room for possible further rate cuts, which could lead to a continued upward trend for the ringgit.

However, the ringgit experienced a decline against several major currencies. It fell against the British pound to 5.6943/7255 from 5.6821/6879, dropped against the Japanese yen to 2.8637/8795 from 2.8597/8629, and weakened slightly versus the euro to 4.7347/7606 from 4.7317/7365.

In the ASEAN region, the ringgit showed mixed results. It appreciated against the Philippine peso to 7.47/7.51 from 7.49/7.51 and against the Indonesian rupiah to 278.6/280.3 from 279.6/280.0. However, it depreciated against the Singapore dollar to 3.3207/3394 from 3.3178/3216 and the Thai baht to 12.8947/12.9767 from 12.8290/8492.

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