This is the sentiment shared by an economist in response to the insistence by US Federal Reserve (Fed) chair Jerome Powell that efforts must be made to continue the fight against inflation.

“Powell’s statement has quashed hope for a dovish tilt, leading to a decline in equity prices and higher bond yields,” Bank Muamalat Malaysia Bhd chief economist and social finance head Afzanizam Rashid told Bernama.

In his address to the US Congress yesterday, Powell was adamant that fighting inflation remains the Fed’s immediate priority.

He also hinted that two more rate hikes are possible. At its last meeting on June 14, the Federal Open Market Committee (FOMC) opted to keep the interest rate at 5% to 5.25%.

Afzanizam said another rate hike would boost the US dollar as interest rate differentials favour US assets in view of its positive carry (a strategy that involves two different positions where the inputs end up being greater than the outputs).

He added that the immediate resistance level for USD/MYR is at 4.7495, while the support level is at 4.6257.

The ringgit pared its losses to open flat against the US dollar today.

At 9am, the local unit stood at 4.6435/4.6470 versus the greenback compared to 4.6430/4.6470 at yesterday’s close, Bernama reported.

Meanwhile, the ringgit was traded lower against a basket of major currencies.

It depreciated versus the British pound to 5.9284/5.9328 from 5.8975/5.9026 at yesterday’s close, fell against the Japanese yen to 3.2728/3.2755 from 3.2716/3.2746 and weakened vis-a-vis the euro to 5.1018/5.1057 from 5.0678/5.0722 previously.

Similarly, the local note traded mostly lower against other Asean currencies.

The ringgit declined against the Thai baht to 13.3361/13.3523 from yesterday’s 13.3194/13.3381 and went down against the Singapore dollar to 3.4635/3.4666 against 3.4546/3.4578 previously.

It dropped against the Philippines’ peso to 8.35/8.36 from 8.34/8.35 yesterday, but was unchanged versus the Indonesian rupiah at 310.4/301.9.