Ringgit falls to its lowest since March 2020.
Ringgit falls to RM4.4 per dollar, its lowest level since March 2020.
Following the US Federal Reserve’s (Fed) hawkish attitude to tighten monetary policy, the ringgit fell further to open at RM4.4 against the US dollar, the lowest since March 2020.
At 9.19 a.m., the local note was trading at 4.4050/4080 against the greenback, up from 4.3960/3975 at the closing on Wednesday. On March 23, 2020, the ringgit dropped to a new low of RM4.447.
This is a reflection of heightened economic concerns, according to Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid, which in the current context is about the potential of increased interest rates in the US and inflation projections.
The consumer sector is feeling the effects of higher inflation as corporate costs rise, reducing profit margins. The Fed is also sticking to their rate raise strategy, which could lead to a significant slowdown in economic activity in the future.
Fed Chair Jerome Powell stated on Tuesday that the central bank will keep raising rates until inflation falls. According to Mohd Afzanizam, major central banks are likely to tighten their monetary policies as inflation appears to be widespread.
As a result, the major central banks are in a difficult position, as they must choose between mounting inflationary pressures and maintaining solid economic development. Recession appears to be the hot topic these days, resulting in increased demand for risk-free assets like US Treasury bonds.
In a separate note, he predicted that certain jurisdictions’ export bans on agrofood-related items will exacerbate inflationary pressures. As a result, foreign exchange market participants will continue to invest in the safe-haven currency. However, the ringgit was generally trading higher against a basket of major currencies.
It climbed against the Singapore dollar, rising to 3.1693/1717 from 3.1713/1728 on Wednesday, against the euro, rising to 4.6200/6231 from 4.6268/6284, and against the British pound, rising to 5.4406/4443 from 5.4554/4573. The ringgit, on the other hand, fell to 3.4269/4295 from 3.4041/4055 against the Japanese yen.
