Declining expectations of a US Federal Reserve interest rate hike in September weighed on the greenback, says analyst.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said lower odds of a rate hike at the September Federal Open Market Committee (FOMC) meeting remained the key driver of the ringgit’s appreciation, alongside positive sentiment towards the Malaysian economy.
Finance minister II Amir Hamzah Azizan said today that Malaysia’s impressive economic growth in the first half of the year, which exceeded Bank Negara Malaysia’s 2026 gross domestic product (GDP) projection of 4% to 5%, demonstrated the resilience of the country’s economy.
GDP grew 5.4% in the first quarter and 6% in the second quarter, resulting in overall economic growth of 5.7% in the first half of 2026.
However, Afzanizam noted that market sentiment remained fragile, as higher crude oil prices could push inflation higher towards the end of the year.
“If that happens, the rate hike thesis could resurface again,” he told Bernama.
At 6pm, the ringgit rose to 4.0575/4.0615 against the US dollar from yesterday’s close of 4.0585/4.0630.
At the close, the local currency ended higher against a basket of major currencies.
It strengthened against the Japanese yen to 2.5420/2.5446 from 2.5496/2.5526 at yesterday’s close and gained against the British pound to 5.4902/5.4956 from 5.5021/5.5082. The ringgit also rose against the euro to 4.6982/4.7028 from 4.7062/4.7115 previously.
The local currency also traded higher against regional currencies.
It was marginally higher against the Philippine peso at 6.56/6.58 from 6.60/6.61 and edged up against the Thai baht to 12.2657/12.2819 from 12.2948/12.3136.
It gained against the Indonesian rupiah to 227.1/227.4 from 228.0/228.3 at yesterday’s close, and climbed against the Singapore dollar to 3.1756/3.1790 from 3.1804/3.1842 previously. - FMT
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