Kuala lumpur: The ringgit opened higher on Tuesday against the US dollar and other major and regional currencies, supported by easing global trade tensions that lifted investor sentiment, an analyst said. At 8.01 am, the local note rose to 4.2140/2460 against the greenback from Monday’s close of 4.2275/2345.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that the US Dollar Index (DXY) had strengthened, buoyed by optimism ahead of upcoming US-China trade talks. The DXY gained 1.03 percent to 98.653 points, as officials from both countries were in discussions in Sweden on a possible trade truce.
Dr Mohd Afzanizam highlighted that the two-day Federal Open Market Committee (FOMC) meeting, beginning today, will be closely watched, with consensus expecting no change to the Fed Funds Rate. Additionally, the US labor market will be under scrutiny, with July’s Nonfarm Payrolls (NFP) report due on Friday, which the market expects to show a softer print of 108,000, down from 147,000 in June.
He also noted that the ringgit had weakened 0.21 percent against the US dollar to RM4.2310 on Monday, amid ongoing trade negotiations between Malaysia and the United States. Malaysia is actively engaging the US to avert the impending 25 percent tariffs set to take effect on August 1, seeking a rate below 20 percent.
Meanwhile, the extended US-China negotiations could signal a prolonged truce, suggesting that the administration of US President Donald Trump remains sensitive to the tariffs’ potential impact on the domestic economy. However, tariff shocks are likely to increase downside risks to global growth in the second half of 2025 and beyond, as higher costs of doing business in the US could dampen aggregate demand.
Dr Mohd Afzanizam indicated that the current term of the Fed chair ends next May, and it appears likely that Jerome Powell’s successor will be more aligned with the US President’s preference for lower interest rates as a policy stance. He expects the ringgit to trade in a narrow range, likely between RM4.23 and RM4.24 today.
At the opening, the ringgit traded higher against most major currencies. It rose against the Japanese yen to 2.8383/8600 from 2.8497/8546 at Monday’s close, appreciated versus the British pound to 5.6286/6714 from 5.6720/6814, and strengthened against the euro to 4.8861/9232 from 4.9331/9412 previously.
The local note was also firmer against regional peers. It improved against the Indonesian rupiah to 257.4/259.6 from 258.3/258.9, gained versus the Singapore dollar to 3.2750/3004 from 3.2917/2974, strengthened against the Thai baht to 12.9626/13.0702 from 13.0511/0787, and inched up against the Philippine peso to 7.37/7.43 from 7.39/7.41 previously.