Ringgit rebounds as market priced in Fed rate hike
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Loading... - Irene Floris
- 29 Apr 2022
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The ringgit recovered some ground to end on a positive note today as analysts believe the 50-basis-point hike in the Fed Fund Rates has been well priced in by the market.
At 6pm, the local unit rose to 4.3520/3570 against the US dollar compared to Thursday’s close of 4.3630/3650.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid expects the Fed to maintain its hawkish stance.
“The question now is how soon the Fed would normalise its benchmark rate towards its neutral rate — a rate that is contractionary or expansionary to the economy,” he said.
This development is crucial especially when the US inflation is at its highest in 40 years.
He said the US gross domestic product (GDP) growth came in lower at 3.6 per cent year-on-year in the first quarter of 2022 versus 5.5 per cent in the prior quarter.
This was due to contraction in government expenditure by 1.6 per cent, while consumer spending, which makes up more than two thirds of the economy moderated to 4.7 per cent from 6.9 per cent.
“As such, we could see the US Dollar Index (DXY) slipped to 102.349 points,” he said.
Bank Negara Malaysia yesterday provide assurance that the country’s economy remains strong despite the ringgit’s downtrend.
Governor Tan Sri Nor Shamsiah Mohd Yunus also dismissed concerns that the depreciation of the ringgit was a “tell-tale” sign that Malaysia will have trouble settling its external debts, as is the case with some countries, stressing that “Malaysia is nowhere near that position”. Read More...
