Ringgit Edges Higher on Year-End Trading Day
The Malaysian ringgit extended its gain against the U.S. dollar on the final trading day of 2025, with early trade showing the local currency slightly stronger as global risk sentiment steadies and traders digest the latest Federal Reserve signals. At 8:00 a.m. local time, the ringgit traded near a fresh session high, supported by softer greenback dynamics after the Federal Reserve’s recent meeting minutes suggested a cautious stance on future policy moves.
Fed Minutes Signal Cautious Outlook, Limiting USD Upside
Markets pared some of their earlier dollar strength after the FOMC minutes indicated the Fed remains data-dependent, with policymakers emphasizing patience before any new rate adjustments. While the minutes affirmed that accommodative policy has helped temper inflation, officials warned that inflation risks persist and that the pace of rate normalization would be gradual. This stance dampened near-term expectations for aggressive dollar strength, giving emerging markets like Malaysia room to breathe as 2026 approaches.
What This Means for the Ringgit
For Malaysia, the immediate reaction to the Fed outlook is twofold. First, a softer U.S. dollar tends to lift regional currencies, including the ringgit. Second, the year-end liquidity surge and holiday season trading often contribute to tighter ranges as market participants square positions ahead of the New Year. Traders will be watching domestic cues, including Malaysia’s economic indicators, government policy signals, and any revisions to growth projections for 2026.
Factors Supporting the Ringgit in the Short Term
Several local and regional factors support the ringgit’s modest gains today. Positive sentiment toward Southeast Asia’s growth prospects, a relatively stable domestic inflation outlook, and ongoing foreign fund flows back into Malaysian assets help underpin the currency. Additionally, broader expectations of a slower path to global monetary tightening can keep the dollar subdued, benefiting commodity-linked and export-reliant currencies such as the ringgit.
What Traders Should Watch Next
Looking ahead to 2026, investors will closely monitor the Fed’s communications for any hints about the pace of rate normalization and balance-sheet adjustments. In Malaysia, attention will likely turn to the upcoming data releases, including trade figures, industrial production, and inflation readings, which can influence the ringgit’s trajectory in the opening months of the new year. Global risk sentiment—ranging from geopolitical developments to commodity price movements—will continue to exert influence on the currency pair.
Conclusion
As 2025 ends, the ringgit appears to be carving a cautious but positive path against the U.S. dollar, buoyed by a softer greenback and tempered by a Fed outlook that favors patience over aggressive tightening. For traders, the key will be balancing U.S. policy expectations with local economic data and regional developments to gauge the ringgit’s potential for continued gains as 2026 begins.
