The benchmark FTSE Bursa Malaysia KLCI fell 0.1 per cent to 1,681.60 points.
The ringgit declined 0.8 per cent to 4.043, its lowest level since August 4, according to a report in the Nikkei Asian Review (NAR).
On Friday at a meeting in Jackson Hole, Wyoming, Yellen said the “case for an increase in the federal funds rate has strengthened in recent months,” considering the continued solid performance of the labour market and outlook for US economy and inflation.
“In view of the latest Fed rhetoric at Jackson Hole and given the higher implied odds from the futures market, we think that the likelihood of lifting rates by 25bps at the September meeting might have transitioned to almost a coin flip at this juncture,” NAR quoted Thomas Lam, an economist at RHB Research Institute as saying.
Yellen’s comments come after a chorus of hawkish comments from Fed policymakers in recent days, further underpinning chances of a rate increase as early as September.
Later on Friday, Fed Vice Chairman Stanley Fisher told CNBC the August employment report, due on Friday, would be crucial in shaping the decision, according to the NAR report.
The Fed last raised rates last December. It will review policy again in September, November and December.
Lam’s base case is for a rate hike in December, but depending on incoming data and further Fed comments, a review to that call is possible, NAR reported.
On the KLCI, 17 of the 30 constituents ended lower Monday and two closed unchanged, while overall declining issues outnumbered advancing ones 513 to 314.
Television services provider Astro Malaysia led losses on the KLCI, declining 1.4 per cent to RM2.88. British American Tobacco Malaysia declined 1.2 per cent to RM49.76.
Malayan Banking declined 1.3 per cent to RM7.90.
CIMB rose 2.1 per cent to RM4.80, leading gains on the KLCI. Earlier Monday, it reported a 36 per cent growth in second-quarter net profit. Similar to Maybank’s move last week, CIMB also trimmed its loan growth target for the year. The lender now expects loan growth of 6 per cent to 7 per cent from an earlier estimate of 10 per cent, said the NAR report.