Malaysian Ringgit Drops as US Fed Signals Rate Hikes

The Malaysian ringgit opened lower and continued to depreciate against the US dollar on September 1, 2026. The currency fell from a Friday close of 4.0230/0270 to 4.0300/0350 in early trading, eventually sliding further to 4.0370/4.0410, representing a 0.32% decline.

This depreciation follows signals from the Federal Reserve System regarding potential interest rate hikes. Federal Reserve Chairman Kevin Warsh indicated during the Jackson Hole Symposium that high inflation and a healthy labor market could justify further tightening. These signals pushed 30-year US Treasury bond yields to 5.25 per cent, putting downward pressure on the ringgit and other Asean currencies, including the Indonesian rupiah, Thai baht, and Singapore dollar.

Additional volatility stemmed from the resumption of military attacks between the United States and Iran, which drove Brent crude prices to US$90.49 per barrel. While the ringgit weakened against the US dollar, Japanese yen, and Singapore dollar, it showed strength against the euro and the British pound.

Market participants are now monitoring the ISM manufacturing index and other economic indicators ahead of the Federal Open Market Committee meeting scheduled for September 15 to determine the next move on interest rates.