KUALA LUMPUR, Sept 19* — The ringgit opened slightly lower against the US dollar, trading at 4.2430/2600 at 8:05 AM, down from Wednesday’s close of 4.2410/2460. This dip occurred despite the US Federal Reserve's recent decision to cut interest rates by 50 basis points.

Following last night’s Federal Open Market Committee (FOMC) meeting, the Fed lowered the interest rate from 5.25%-5.50% to 4.75%-5.00%, as noted by Dr. Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd. The decision was not unanimous, with one member suggesting a smaller cut of 25 basis points, but there was general agreement on the need to shift monetary policy.

Dr. Mohd Afzanizam explained that the Fed's new stance aims for a more neutral monetary policy, targeting the Fed Fund Rate to reach 4.4%, 3.4%, and 2.9% by the end of 2024, 2025, and 2026, respectively. This 50 basis point cut reflects the Fed's commitment to achieving maximum employment alongside price stability, with an expectation of additional cuts of 200 to 225 basis points by the end of 2026.

Given these developments, he believes the ringgit should remain resilient and gradually appreciate against the US dollar. He pointed out that the average USD/MYR exchange rate since the currency peg was removed on July 21, 2005, is RM3.78, suggesting potential for further appreciation.

In contrast, the ringgit performed better against several major currencies. It strengthened against the British pound, trading at 5.6003/6228, up from 5.6091/6158. It also surged against the Japanese yen to 2.9717/9838 from 2.9940/9977 and appreciated against the euro to 4.7148/7337 from 4.7236/7292.

However, its performance against ASEAN currencies was mixed. The ringgit rose against the Singapore dollar to 3.2724/2858 from 3.2792/2833 and gained against the Thai baht to 12.6994/7572 from 12.7472/7680. It remained almost flat against the Philippine peso at 7.61/7.65 and slightly weakened against the Indonesian rupiah to 276.6/277.9 from 276.5/277.0 on Wednesday.