Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said expectations of a US Federal Reserve (Fed) interest rate cut have fuelled demand for emerging market currencies, including the ringgit.

“Clearly, traders and investors are watching for the Fed’s latest assessment, especially the dot plot chart, which will guide the market on the direction of US interest rates,” he told Bernama.

He said a 25 basis points cut had largely been priced in by the market.

Afzanizam added that the key focus would be how far the Fed is prepared to lower rates and what that means for the US economic outlook.

“In the immediate term, the dollar looks weak as the Fed may need to show the market that it is on top of the game,” he said.

At 6pm, the local currency stood at 4.1860/4.1900 against the US dollar, compared with Friday’s close of 4.1975/4.2080.

The ringgit last closed higher at RM4.1760 on Oct 2, 2024.

The market was closed on Monday and Tuesday for Malaysia Day holidays.

The ringgit, however, traded lower against major currencies, weakening against the yen to 2.8607/2.8636 from 2.8373/2.8446, against the British pound to 5.7131/5.7185 from 5.6864/5.7006, and against the euro to 4.9583/4.9631 from 4.9203/4.9326.

Against Asean currencies, the ringgit strengthened against the Indonesian rupiah to 254.6/255 from 256.3/257 and against the Thai baht to 13.1892/13.2081 from 13.2317/13.2703.

It, however, weakened against the Philippine peso to 7.36/7.37 from 7.35/7.37 and against the Singapore dollar to 3.2793/3.2827 from 3.2719/3.2803.