Ringgit weakens against US dollar, mixed against other major currencies

 Higher crude oil prices could raise inflation risks and long-term bond yields, while central banks may be seen as too slow to tighten policy, says analyst.

KUALA LUMPUR:

The ringgit continued to trade lower against the US dollar on Wednesday but strengthened against the British pound and the euro amid rising global bond yields and concerns over elevated government debt levels.

At 6pm, the ringgit was quoted at 4.0435/4.0475 against the US dollar compared with yesterday’s close of 4.0370/4.0410.

The market was closed on Monday for the Merdeka Day celebration.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said rising bond yields currently remained the main focus, particularly in developed markets.

“The context of higher long-term bond yields would include a higher inflation risk premium following the rise in crude oil prices, while global central banks could be seen as being behind the curve in tightening monetary conditions,” he told Bernama.

Afzanizam elaborated that, above all, the concern was the lack of fiscal discipline to contain fiscal deficits and elevated government debt levels.

“Based on International Monetary Fund (IMF) data, gross government debt as a percentage of gross domestic product (GDP) in 2026 for the US, the UK and Japan is expected to hit 125.8%, 103.6% and 204.4% of GDP, respectively.

“It seems the market was a bit directionless, as the mode does indicate a risk-off mode, but traders and investors were perplexed in seeking refuge in choosing the right asset class.

“On that note, the ringgit was hovering within a narrow band, ranging between RM4.0405 and RM4.0448 against the US dollar,” he said.

Against a basket of major currencies, the ringgit appreciated against the euro to 4.6787/4.6834 from yesterday’s 4.6801/4.6847 and rose against the British pound to 5.4527/5.4581 from 5.4657/5.4711.

However, the local currency weakened against the Japanese yen to 2.5294/2.5321 from 2.5223/2.5250.

The local currency traded mostly lower against regional currencies.

It inched up against the Philippine peso to 6.46/6.47 from 6.47/6.48 but declined against the Singapore dollar to 3.1739/3.1773 from 3.1703/3.1736 yesterday and fell against the Thai baht to 12.1321/12.1488 from 12.1315/12.1483.

The ringgit also traded marginally lower against the Indonesian rupiah at 227.6/227.9 from yesterday’s close of 227.5/227.8. - FMT