Ringgit opens slightly higher on softer US policy outlook

The local note rises to 4.0820/4.0940 on growing expectations of a US rate cut in 2026.

KUALA LUMPUR:

 The ringgit opened slightly higher against the US dollar on Friday, holding at the 4.08 level, supported by growing expectations of a softer US monetary policy outlook and recent global central bank developments.

At 8am, the ringgit strengthened to 4.0820/4.0940 against the US dollar from 4.0840/4.0880 at Thursday’s close.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said expectations of an interest rate cut in 2026 have been gaining traction following softer-than-expected US inflation data.

It was reported that US inflation in November came in below expectations at 2.7%, compared with consensus estimates of 3.1%. Similarly, core inflation moderated to 2.6% from 3.0% in September.

“Having said that, October’s data point was not available due to a government shutdown which occurred for 43 days beginning in October, resulting in the inability to compute sequential data points such as month-on-month figures,” he noted.

Meanwhile, he said global monetary policy signals were mixed, with the Bank of England having cut its bank rate by 25 basis points to 3.75%, marking its fourth reduction this year amid persistent moderation in inflation.

In contrast, the European Central Bank kept its policy rate unchanged following an upbeat assessment of growth and inflation next year.

“Despite the softer US inflation, the US Dollar Index rose 0.07% to 98.441 points overnight, while the ringgit closed 0.09% higher on Thursday, outperforming most Asian peers.

“Perhaps today the ringgit might test a breach of the RM4.08 level, as the case for a lower US federal fund rate in 2026 is building up,” he added.

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

It depreciated against the British pound to 5.4629/5.4790 from 5.4513/5.4567 at Thursday’s close and fell against the Japanese yen to 2.6234/2.6313 from 2.6188/2.6217, but edged up against the euro to 4.7861/4.8002 from 4.7869/4.7915.

The local currency however traded mixed against Asean peers.

It weakened against the Singapore dollar to 3.1639/3.1736 from 3.1620/3.1653, slipped versus the Thai baht to 12.9810/13.0287 from 12.9750/12.9935, was almost flat against the Philippine peso to 6.97/6.99 from 6.97/6.98, but inched up against the Indonesian rupiah to 244.1/244.9 from 244.2/244.5 previously. - FMT