KUALA LUMPUR: The ringgit continued its uptrend today, closing at a near 11-month high of RM4.58 against the US dollar.

An analyst said this was driven by the Bank of Japan's (BOJ) decision to raise interest rates and the anticipation of a Federal Reserve interest rate cut in September.

At 6 pm, the ringgit soared 315 basis points to 4.5885/5925, compared to the greenback's closing of 4.6200/6235 on Tuesday.

UOB Kay Hian Wealth Advisors head of investment research Mohd Sedek Jantan said the BoJ's move signalled confidence in Japan's economic recovery, and it could bolster investor confidence in Asian currencies if the positive sentiment extends to global markets.

"This will lead to a continued strengthening of the ringgit.

"Higher closing in the majority of Asian markets today is evidence that investors are now starting to move towards emerging markets in Asia," he told Bernama.

Mohd Sedek said that attractive interest rates in Japan might encourage investors to seek higher yields elsewhere, including in emerging markets like Malaysia.

"As investors diversify their portfolios, capital inflows into Malaysian assets can further strengthen the ringgit," he added.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the BoJ, as expected, raised their policy rates by 15 basis points, bringing it to 0.25 per cent.

"Perhaps the rise in BoJ's rate and the growing expectation of a rate cut in the US would result in further demand for emerging market currencies, including ringgit," he said.

The Federal Open Market Committee (FOMC) is expected to announce their decision tonight with most consensus is projecting no change in the Fed Fund Rate.

While the Federal Reserve (Fed) is expected to keep its policy rate at the status quo, Mohd Afzanizam foresees the Fed would want to provide clear guidance on the eventual rate cut where market participants have assigned a higher probability for September.

Meanwhile, the local note traded mostly higher against a basket of major currencies.

The ringgit rose against the British pound to 5.8875/8926 from 5.9427/9472 and was higher against the euro to 4.9680/9723 from 5.0044/0082 at yesterday's close.

However, it fell against the Japanese Yen to 3.0515/0545 from 2.9845/9870.

Meanwhile, the local note traded mostly higher against Asean currencies.

It rose against the Indonesian rupiah to 282.1/282.5 from 283.3/283.7, improved against the Singapore dollar to 3.4273/4306 from 3.4370/4398 and inched up against the Philippine peso to 7.86/7.87 from 7.87/7.89 previously.

The ringgit slipped vis-a-vis the Thai baht to 12.8717/8880 from 12.8319/8470.