Ringgit closes at fresh 7-year peak against the dollar
The Malaysian ringgit closed the trading session at its strongest level in seven years, finishing at around 3.9500/3.9555 per U.S. dollar, from 3.9615/3.9670 at yesterday’s close. This marks the highest closing level since the ringgit touched 3.9480 in May 2018, signaling renewed investor confidence in Malaysia’s economy and a softer greenback in the currency markets.
What’s driving the move?
Analysts point to a combination of domestic and external factors supporting the ringgit. A firmer domestic growth outlook, relatively robust commodity prices, and a softer U.S. dollar basis for the week have contributed to demand for the local currency. In Kuala Lumpur, traders noted that local economic indicators, along with expectations for continued external demand, have helped the ringgit regain ground after a period of volatility tied to global rate expectations.
Impact of external considerations
Many market observers highlighted that the USD weakness has been a key backdrop for regional FX performance. Slower-than-expected U.S. inflation or a clearer path for rate cuts could further support emerging market currencies, including the ringgit. In addition, Malaysia’s trade position and improving current account dynamics are contributing to a more favorable sentiment toward the domestic currency.
What economists are saying
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid and other analysts have noted that the ringgit has benefited from a mix of improving domestic indicators and external risk-on appetite. Rashid has emphasized that while the move is constructive for exporters and importers alike, traders should monitor evolving policy signals from major central banks and any potential shifts in commodity prices that could influence the ringgit’s trajectory.
Trading outlook and implications
With the ringgit posting a fresh seven-year high, investors will be watching for follow-through in the coming sessions. If the currency continues to gain on a broadening risk appetite, it could bolster Malaysia’s external balance and support consumer purchasing power. Conversely, a renewed dollar rally or softer external demand could cap further gains and lead to a period of consolidation.
What this means for policymakers and businesses
For policymakers, a stronger ringgit can help reduce import costs and support inflation management, though a sharp appreciation would require careful balancing to preserve export competitiveness. For businesses, the latest move improves pricing power for imports and may affect hedging strategies for companies with exposure to USD-denominated costs and revenues.
Overall, the ringgit’s ascent to a fresh 7-year high against the dollar underscores a complex interplay of domestic resilience and favorable external conditions. Market participants will remain tuned to global rate expectations, commodity dynamics, and Malaysia’s ongoing economic recovery as they navigate the next chapter for the currency.
