Ringgit slips against US dollar as Fed hike bets stay firm

By 6pm, the ringgit was at 4.0780/0825 against the greenback, weaker than Tuesday’s 4.0730/0775 close. Earlier in the session, it had strengthened to 4.0640 before losing momentum as the dollar held firm. Bank Muamalat chief economist Mohd Afzanizam Abdul Rashid said investors were still expecting the Fed to raise rates by another 50 basis points this year, a view that supports the US currency by widening the yield advantage over lower-yielding peers.

Against other major currencies, the local note posted clearer gains. It rose to 4.6522/6573 per euro from 4.6705/6757, strengthened to 5.4156/4216 versus the pound from 5.4452/4512, and improved against the yen to 2.5836/5868 from 2.5958/5988. In ASEAN trading, the ringgit advanced against the Singapore dollar and Thai baht, but weakened versus the Indonesian rupiah and Philippine peso.

The move reflects a broader macro theme rather than a Malaysia-specific shock: as long as the Fed stays in tightening mode, the dollar should continue to enjoy support. That makes short-term ringgit gains vulnerable whenever US yields rise or expectations of more aggressive Fed action harden. For investors, the implication is that any recovery in the Malaysian currency is likely to be uneven and highly dependent on the next shift in US monetary-policy pricing.

Technically, dollar strength has also been visible in exchange-traded proxies. The US Dollar Index fund UUP has been holding above both its 50-day and 200-day moving averages, while RSI readings have stayed elevated, underscoring persistent demand for the greenback. Adalytica’s US dollar trade signals also point to neutral sentiment but elevated awareness, suggesting positioning remains alert to further swings.

For the ringgit, the near-term question is whether regional strength and any improvement in risk appetite can offset the Fed-driven dollar bid. Until the market gets clearer evidence that US rates are near a peak, the Malaysian currency is likely to remain capped against the dollar even if it can continue to outperform some other major peers.