The ringgit opened lower against the US dollar on Tuesday (July 25) ahead of Wednesday’s Federal Open Market Committee (FOMC) interest rate announcement.
As the US Federal Reserve is widely expected to raise interest rates by another 25 basis points, investors are looking forward to the accompanying statement to gauge the future outlook for rates.
At 9am, the local note fell to 4.5705/5740 against the greenback compared with 4.5640/5690 at Monday’s close.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the possible rate hike would given an edge to the US dollar as the differential between the Federal Funds Rate and overnight policy rate (OPR) is set to widen further, making US assets more attractive.
“Nonetheless, the final purchasing managers’ index (PMI) readings for various jurisdictions were lower in particular for the US manufacturing sector, indicating that manufacturers have become increasingly wary about their business prospects.
“This may have an impact on their decision on labour hiring and capital expenditure. So, the case for central banks to be not overly restrictive is building up,” he told Bernama.
