Kuala Lumpur: The ringgit strengthened against the US dollar in early Thursday dealings, supported by improved buying sentiment for the domestic currency despite a firmer US Dollar Index (DXY). At 8.02 am, the ringgit advanced to 4.4150/4305 against the greenback from Wednesday’s close of 4.4260/4300.

According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that the DXY edged up to 103.584 but remained relatively low. He indicated that there could be a positive spillover effect on emerging market currencies, including the ringgit, which might linger around RM4.41 to RM4.42 today.

Dr Mohd Afzanizam mentioned that the outlook was supported by recent economic data, particularly the lower-than-expected US consumer price index (CPI) print, which came in at 2.8 percent in February versus the consensus estimate of 2.9 percent. Similarly, core CPI rose 3.1 percent, below the market forecast of 3.2 percent.

He explained that the latest inflation data raises hopes that the US Federal Reserve may be more inclined to ease monetary policy to stabilize the economy. However, he warned that the ongoing tariff war is expected to push up business costs, and weak consumer and business sentiment could weigh on spending, potentially dragging growth.

Dr Mohd Afzanizam highlighted that the focus would now turn to the Federal Open Market Committee meeting on March 18-19. He stated that the market will closely scrutinize the dot plot and Fed Funds Rate projections to assess whether they align with expectations of three or four rate cuts this year. As such, caution is likely to dominate currency markets.

The ringgit also strengthened against a basket of major currencies. It rose to 2.9767/9875 against the Japanese yen from 2.9775/9804 at Wednesday’s close, climbed to 5.7236/7437 against the British pound from 5.7255/7306, and gained against the euro at 4.8057/8226 from 4.8301/8345 previously.

The local currency traded mostly higher against ASEAN currencies as well. It advanced to 3.3138/3257 against the Singapore dollar from Wednesday’s closing of 3.3181/3213, gained to 268.3/269.4 against the Indonesian rupiah from 269.0/269.3, and rose to 7.69/7.73 against the Philippine peso from 7.71/7.73. However, the ringgit edged lower against the Thai baht to 13.0695/1235 from 13.0688/0868 previously.