Kuala lumpur: The ringgit experienced a slight decline against the US dollar on Friday, influenced by increasing uncertainty over crude oil prices due to disruptions in vessel traffic in West Asia and the United States' imposition of new tariffs on 60 countries, including Malaysia.
According to BERNAMA News Agency, the local currency ended the day at 4.0885/0935 against the greenback, a marginal drop from the previous day's close of 4.0870/0910. Bank Muamalat Malaysia Bhd's chief economist, Dr. Mohd Afzanizam Abdul Rashid, noted that Asian currencies exhibited mixed behavior amid the uncertainties related to crude oil prices and the US tariff actions. The US dollar-ringgit exchange rate fluctuated within a narrow range of RM4.0890 to RM4.0977.
Dr. Mohd Afzanizam remarked, "Global growth could slow as tariffs can disrupt the supply chain. At the same time, the ongoing blockade in the Straits of Hormuz will exert upward pressure on crude oil prices. So external risks have become elevated, which could lead to higher demand for the US dollar."
In response to the recent developments, the Ministry of Investment, Trade and Industry (MITI) announced that it will continue discussions with the United States regarding the newly imposed 10 percent forced labor-related tariff on Malaysian exports, effective from 12.01 am US time on July 24. This tariff succeeds the temporary measure under Section 122 of the Trade Act 1974.
Stephen Innes, managing partner at SPI Asset Management, commented on the situation, stating that the ringgit closed with a slight weakening bias due to the US administration's latest tariff measures and a moderate hawkish repricing along the Federal Reserve curve. This occurred as oil prices climbed amidst escalating tensions in the US-Iran conflict.
He added, "Oil prices are likely to remain the biggest driver. A sustained rise could influence the Fed's policy decision if officials become concerned that energy inflation is spreading into other parts of the economy." Despite the challenges, Innes noted that Malaysia, as an energy exporter, might be better positioned than many regional peers, potentially resulting in the ringgit weakening against the US dollar in a high oil price environment while outperforming other Asian currencies.
At the close of the trading day, the ringgit showed strength against a selection of major currencies. It appreciated against the Japanese yen, euro, and British pound. However, the ringgit displayed mixed performance against regional currencies, with gains against the Indonesian rupiah and Philippine peso, a decline against the Thai baht, and stability against the Singapore dollar.