KUALA LUMPUR: The ringgit climbed to 4.18 against the US dollar — its strongest level in over six weeks — as expectations grow for a US Federal Reserve (Fed) rate-cut cycle and confidence in Malaysia’s economic resilience builds.
The currency opened at 4.2045/2160 yesterday and firmed to 4.1865 by 10am, approaching its July 1 high of 4.1805.
UOB Kay Hian Wealth Advisors head of investment research Mohd Sedek Jantan said the 4.20 level is psychologically significant for markets. “A decisive break and hold below 4.20 would reinforce the view that the currency has entered a new appreciation phase,” he said.
He attributed the ringgit’s momentum to expectations the Fed will deliver at least two rate cuts before year-end, after US Treasury Secretary Scott Bessent urged a 1.5-percentage-point reduction in interest rates. Markets now anticipate a more aggressive easing path into 2026.
Domestic factors are amplifying the ringgit’s strength. Mohd Sedek pointed to the recently unveiled 13th Malaysia Plan, which offers clear policy direction, targeted investment incentives and sectoral growth initiatives.
These measures are expected to attract capital inflows and support currency fundamentals. Malaysia’s steady GDP growth, current-account surplus and rising foreign investment — particularly in high-value industries such as electronics, renewable energy and data centres — further underpin the currency.
Bank Muamalat Malaysia chief economist Mohd Afzanizam Abdul Rashid echoed the sentiment, describing the current level as a confidence marker rather than a hard technical threshold. He noted two dissenting Fed policymakers supported a rate cut in July, while US labour market data has softened, evidenced by major downward revisions to non-farm payroll figures.
With inflation stable and speculation of a 50-basis-point cut in September, analysts see a weakening US dollar trend that favours the ringgit.
Looking forward, Mohd Sedek expects the ringgit to reach 4.10 by end-2025 and 4.05 by the first quarter of 2026.
“If the ringgit decisively holds below 4.20 in the coming weeks, the next levels to watch will be 4.18 and 4.15. A sustained move below 4.15 would confirm the structural shift toward our 4.05 target,” he said. – BERNAMA
