How did the Fed chair’s reluctance to guide rates affect ringgit stability?

Question

Accepted Answer

The Fed chair’s reluctance to provide rate guidance helped keep the ringgit stable

The ringgit stayed stable because the Fed chair was reluctant to provide forward guidance on US interest rates. With less clear signalling on rates, traders appeared to keep their expectations steady, which helped limit sharp moves in the currency. At 8am, the ringgit was at 4.0695/0780 against the US dollar, compared with 4.0690/0735 at Friday’s close.
Ringgit was steady at the start of the week despite rate-hike reassessments
On Monday, the ringgit opened mostly flat against the US dollar as traders reassessed the likelihood of a US interest rate hike after weaker-than-expected US nonfarm payrolls data. The local note was 4.0695/0780 at 8am, only slightly above 4.0690/0735 at the previous close. This near-flat opening aligned with the view that uncertainty around rate timing was not translating into immediate volatility.
The Fed chair’s “reluctance” reduced pressure for immediate market repricing
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the Fed chair’s reluctance to provide forward guidance on interest rates helped keep the ringgit stable. In practical terms, the market had fewer explicit cues about where rates might go next, which supported steadier trading conditions. The stability was noted even as traders weighed the US rate-hike outlook.
Key upcoming catalysts were still on the calendar for Thursday, July 9
Dr Afzanizam pointed to the US Federal Open Market Committee (FOMC) minutes to be released this week as the main focus, alongside Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) meeting on Thursday. Both events were scheduled for Thursday, July 9. The presence of these catalysts indicated that markets were watching for clearer signals later, even as the ringgit held steady at the open.

Reading history

Hide →

This history is cleared when the page is closed.

How did the Fed chair’s reluctance to guide rates affect ringgit stability?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

2

0

0

Share with friends