Ringgit opens higher ahead of Q2 GDP estimate

 The local currency strengthens to 4.0740/4.0780 against the US dollar on expectations of 5.1% growth.

KUALA LUMPUR:

The ringgit opened higher against the US dollar on Wednesday as investors anticipated an upbeat advance estimate of Malaysia’s second-quarter (Q2) gross domestic product (GDP), analysts said.

At 8am, the local currency appreciated to 4.0740/4.0780 against the greenback from Tuesday’s close of 4.0760/4.0800.

Malaysia’s Q2 advance GDP figures are scheduled for release on Friday.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the economy is likely to maintain its momentum with growth above 5.0% for the quarter, forecasting an expansion of 5.1%.

Afzanizam said the expansion would be supported by resilient external demand, driven by electrical and electronic (E&E) products and commodity exports.

“However, cautious consumer spending is expected to keep GDP growth in check. We have seen private consumption grow below its average over the past three quarters, and we believe the same trend will be replicated in the second quarter of 2026,” he added.

Meanwhile, he said softer-than-expected US inflation data for June is likely to influence sentiment in the foreign exchange market.

“The main highlight was the US consumer price index (CPI), which recorded its largest monthly decline since May 2020. Driven by a sharp drop in petrol prices that lowered transport costs, the US CPI fell 0.4% month-on-month in June, steeper than the 0.1% decline expected by the consensus.

“The yields on the two-year and 10-year US Treasury notes fell eight basis points and four basis points to 4.18% and 4.58%, respectively,” he said, adding that the ringgit has room to strengthen further today.

He said the ringgit could attempt to breach the RM4.05 level against the US dollar during the day.

At the opening, the ringgit traded mostly lower against a basket of major currencies.

It strengthened against the Japanese yen to 2.5117/2.5143 from 2.5131/2.5157 on Tuesday but weakened against the British pound to 5.4571/5.4625 from 5.4533/5.4586 and eased versus the euro to 4.6545/4.6591 from 4.6470/4.6516 previously.

Against regional currencies, the ringgit traded mixed.

It rose against the Indonesian rupiah to 225.1/225.5 from Tuesday’s close of 225.3/225.6 but slipped against the Singapore dollar to 3.1562/3.1595 from 3.1533/3.1567.

The local note also weakened against the Thai baht to 12.1695/12.1873 from 12.1556/12.1722 and was unchanged against the Philippine peso at 6.60/6.61. - FMT