Hawkish Fed to test ringgit resilience despite easing Middle East risks
Performance: MYR weakened to 4.12/USD after the Fed’s hawkish shift reinforced expectations of higher US rates for longer.
Market Dynamics: The Fed’s hawkish pivot and reduced prospects for policy easing boosted the USD. The ringgit weakened sharply as markets repriced higher US yields and increased the probability of further Fed tightening. Improved US-Iran relations and lower oil prices failed to offset the impact of a more restrictive Fed outlook. FX positioning remained USD-supportive as investors pared back Fed easing expectations and maintained defensive allocations.
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