By Danni Haizal Danial Donald
KUALA LUMPUR: The ringgit edged higher against the US dollar on the first trading day of the year, as the greenback weakened on expectations of possible further United States Federal Reserve (Fed) rate cuts in 2026.
At 8 am, the local currency rose to 4.0540/0645 versus the US dollar from Wednesday’s close of 4.0580/0620.
Markets were closed on Thursday for New Year’s Day.
According to reports, the Fed is expected to implement further interest rate cuts in 2026, amid open pressure from US President Donald Trump for a more dovish central bank leadership.
It noted that such expectations have weighed on the greenback, as Trump has publicly stated that he wants the next Fed chairman to keep interest rates low and never “disagree” with the US president.
These remarks have heightened concerns among investors and policymakers concerning the independence of the Fed.
Meanwhile, IPPFA Sdn Bhd’s director of investment strategy and country economist, Mohd Sedek Jantan, said the local note was stronger in line with regional currencies, supported by a firmer Bloomberg Asia Dollar Index as broad-based Asian currency strength re-emerged.
He said in 2025, the US Dollar Index (DXY) declined by approximately 9.6 per cent, reflecting a sustained easing in US dollar exceptionalism.
“With Asia’s macro outlook continuing to improve, most visibly through China’s Composite Purchasing Managers Index (PMI) rising to a six-month high as both manufacturing and services returned to expansion, the ringgit is well positioned to extend its strengthening trend into 2026 against the US dollar,” he told Bernama.
At the open, the ringgit traded mostly lower against a basket of major currencies.
It appreciated against the Japanese yen to 2.5864/5933 from 2.5907/5934 on Wednesday, but it was slightly lower versus the British pound to 5.4624/4765 from 5.4531/4585, and eased vis-a-vis the euro to 4.7635/7758 from 4.7617/7664.
However, the local note was mostly higher against ASEAN peers.
It rose against the Singapore dollar to 3.1541/1628 from 3.1550/1584, gained versus the Thai baht to 12.8291/8742 from 12.8560/8756, strengthened vis-a-vis the Indonesian rupiah at 242.9/243.6 from 243.2/243.6, but it was almost flat versus the Philippine peso at 6.88/6.91 from 6.88/6.90.
— BERNAMA
