KUALA LUMPUR, Jan 27 ― The ringgit dipped against the US dollar today on buying support for the greenback following the United States Federal Reserve's (Fed) decision to hold its key interest rate near zero, although it noted that the quantitative easing will end on schedule in March, an analyst said.

At 9am, the local note fell by 160 basis points (bps) to 4.2050/2070 versus the greenback from 4.1890/1915 at yesterday’s close.

OANDA senior market analyst Edward Moya said the decision will pave the way for the Fed to raise interest rates in March.

“The Fed is going to try to convince markets that they have a plan that is hawkish enough to fight inflation but not cripple markets and create a de-risking environment,” he said.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid noted that the Federal Open Market Committee (FOMC) has become more direct in its communication.

“Following this, the US dollar Index (DXY) jumped to more than 96 points.

“As such, we can expect the ringgit to be volatile. It might pierce the immediate resistant level of RM4.1958 in the near term,” he told Bernama.

Meanwhile, the ringgit was traded higher against a basket of other major currencies.

It appreciated against the Singapore dollar to 3.1150/1170 from 3.1152/1173 at yesterday’s close and improved versus the euro at 4.7239/7261 compared with 4.7281/7309 on Wednesday.

The domestic unit strengthened against the British pound to 5.6561/6588 from 5.6567/6610 and rose vis-a-vis the Japanese yen to 3.6670/6688 from 3.6710/6735 previously. ― Bernama