U.S. dollar weakens versus Malaysian Ringgit due to more accommodative Federal Reserve outlook
The Malaysian ringgit began the week on a positive note, strengthening against a basket of major currencies. At 8 am, the local note stood at 4.1840/2140 per dollar, a slightly stronger position than Friday's close of 4.1975/2080.
The ringgit's performance is supported by several factors. Stephen Innes, managing director of SPI Asset Management, attributes this to softer US yields, resilient risk appetite, and easing geopolitical overhang between the US and China. The recent announcement of a "framework" deal to resolve the dispute over TikTok between the US and China is viewed as a signal that tariff disputes and reciprocal trade measures may be cooling.
The ringgit also benefited from signs of easing trade tensions between Washington and Beijing. This, coupled with the resilient global equity markets, has further underpinned the ringgit's strength.
Against Asean currencies, the local note was mixed. The ringgit strengthened to 13.2092/3114 against the Thai baht but fell to 3.2800/3041 against the Singapore dollar. The ringgit was flat against the Philippine peso. However, the ringgit improved to 254.4/256.4 versus the Indonesian rupiah.
The ringgit's performance is also influenced by the expected policy stance of the US Federal Reserve (Fed). The current position of the Fed is expected to cut the federal funds rate by 25 basis points in September 2025, lowering it to the 4.00%–4.25% range. This response to a cooling labor market and stalled disinflation has contributed to weakening the US dollar and, in turn, strengthening the Malaysian ringgit against the dollar.
The ringgit slipped to 4.9660/5.0016 against the euro and 5.7133/7542 against the British pound. However, these movements were relatively minor compared to the overall strengthening trend of the ringgit against major currencies.
In summary, the Malaysian ringgit started the week on a positive note, strengthening against a basket of major currencies. This is largely due to softer US yields, resilient risk appetite, easing geopolitical overhang between the US and China, signs of easing trade tensions between Washington and Beijing, and the expected policy stance of the US Federal Reserve.
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