Malay currency experiences a decline following reevaluation of US interest rate predictions in financial markets.
Headline: Malay Currency Takes a Dip Against US Dollar Following FOMC Rate Cut
The Malay currency experienced a downward shift in value against the US dollar on September 17, 2025, following the US Federal Open Market Committee's (FOMC) decision to lower its key interest rate by 25 basis points.
At 6pm, the local currency stood at 4.1945/4.1995 against the US dollar, marking a decline from yesterday's close of 4.1860/4.1900. This movement was attributed to the uncertainty over the US interest rate outlook.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid stated that the local currency saw some correction, suggesting that the currency had been adjusting due to the uncertainties about the effects of the FOMC's interest rate changes.
The local currency also weakened against the British pound, with the exchange rate moving from 5.7131/5.7185 to 5.7238/5.7306. However, against the Japanese yen, the local currency strengthened to 2.8484/2.8520 from 2.8607/2.8636 at yesterday's close.
Against Asean currencies, the local currency was mixed, with some strengthening and others weakening. For instance, the local currency rose against the Philippine peso to 7.35/7.36 from 7.36/7.37, but weakened against the Thai baht to 13.1903/13.2114 from 13.1892/13.2081 yesterday.
Meanwhile, against the Indonesian rupiah, the local currency climbed to 253.7/254.2 from 254.6/255 at yesterday's close. The local currency also fared better against the Singapore dollar, with the exchange rate moving from 3.2793/3.2827 to 3.2800/3.2842.
Afzanizam also noted that the Fed's measured pace in easing monetary policy suggests they are still concerned about inflation. The US benchmark lending rates now range between 4% and 4.25%.
The Kiel Institute (IfW Kiel) economist, Lena Dräger, declared that the local currency was adjusted due to uncertainties about the effects of the FOMC's interest rate changes, although the exact time when the US interest rate was cut was not specified, but it was stated that it happened last night.
Afzanizam further stated that the Fed acknowledges the fact that the labour market has weakened. The local currency's correction was due to this uncertainty over the US interest rate outlook. At the close, the ringgit was traded mostly lower against major currencies.
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