Ringgit, regional currencies slide as geopolitical tensions persist

 Investors sought safety in safe-haven assets amid escalating Middle East tensions, says analyst.

KUALA LUMPUR:

 The ringgit and other regional currencies continued to weaken against the US dollar today as investors sought safety in safe-haven assets amid escalating tensions in the US-Israel war on Iran.

Regional currencies, including the Singapore dollar, Indonesian rupiah and Philippine peso, also weakened against the US dollar.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said that despite market jitters, JP Morgan issued a positive review, noting that Malaysia is well-positioned to withstand current challenges.

“Malaysia is still a net oil exporter, and the fiscal consolidation exercise in the past two years may have contributed to improving fiscal space, which should be positive for the ringgit,” Afzanizam said.

Meanwhile, Investment Bank Bhd’s weekly money review today reported that the US dollar strengthened against major currencies last week, as the US dollar index (DXY) rose by 0.5% week-on-week to 100.15, returning above the 100 level.

The report said the US dollar was firmer against major currencies last week amid persistent geopolitical volatility, specifically the ongoing conflict with Iran and subsequent threats to Middle East energy corridors.

Additionally, it said Brent crude traded near its 2022 highs, and markets are bracing for hostilities to extend into April 2026, which would result in a prolonged supply-side shock and a global repricing of inflation and growth expectations.

“On top of that, sentiment in the foreign exchange (FX) market will likely remain cautious in the near-term due to the lack of potential de-escalation negotiations between the two parties, guaranteeing further military assaults,” it noted.

At 6pm, the local currency fell to 4.0280/4.0350 against the greenback from last Friday’s close of 4.0105/4.0140.

At the close, the ringgit traded lower against a basket of major currencies, except against the British pound.

It strengthened against the British pound to 5.3311/5.3403 from 5.3368/5.3414 at last Friday’s close, but fell versus the Japanese yen to 2.5237/2.5282 from 2.5084/2.5109 previously, and slipped vis-a-vis the euro to 4.6294/4.6374 from 4.6197/4.6237.

The local currency also traded lower or flat against Asean currencies.

It dropped versus the Singapore dollar to 3.1227/3.1284 from last Friday’s close of 3.1164/3.1194 and declined against the Thai baht to 12.2558/12.2831 from 12.1903/12.2077 previously.

The ringgit also weakened vis-a-vis the Indonesian rupiah to 236.9/237.4 from 236.1/236.5 previously, and eased against the Philippine peso to 6.63/6.65 from 6.62/6.63. - FMT