The ringgit slid further to open lower at RM4.40 against the US dollar, the lowest since March 2020, following a hawkish stance by the US Federal Reserve (Fed) to tighten its monetary policy.
It hit a record low on March 23, 2020, when it reached RM4.447.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said this comes on the heels of heightened economic uncertainties, which, in the current context, is about the prospect of higher interest rate in America and inflation outlook.
“The higher inflation rate is taking a toll on the consumer sector as business costs are rising and affecting their profit margin.
“The Fed is also adamant with its rate hike campaign, which may cause much slower economic activities at some point in future.”
Fed chair Jerome Powell on Tuesday said the Fed will keep raising rates until inflation comes down.
Afzanizam said major central banks are also likely to tighten their grip on monetary policy as inflation seems to be pervasive.
“Major central banks are really in a tough spot as they need to weigh between rising inflationary pressures and ensuring economic growth remains robust.”
Recession also appears to be the buzz word these days, resulting in higher demand for risk-free assets, he added.
Afzanizam said the ban export on agrofood-related products by certain jurisdictions is expected to amplify the extent of inflationary pressures.
Hence, he added, foreign exchange players will continue to remain in the safe-haven currency.
The ringgit was, however, traded mostly higher against other major currencies.
It appreciated against the Singapore dollar to 3.1693/1717 from 3.1713/1728 at the close yesterday, increased vis-à-vis the euro to 4.6200/6231 from 4.6268/6284, and strengthened against the British pound to 5.4406/4443 from 5.4554/4573.
However, the local note slid versus the Japanese yen to 3.4269/4295 from 3.4041/4055.