Fed Rate Cut Pushes Ringgit To Four Year Peak

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The local currency could even test a break below the RM4.10 level at closing following the Federal Reserve’s decision, says analyst.
KUALA LUMPUR: The ringgit opened at its strongest level in more than four years against the greenback after the US Federal Reserve cut its benchmark lending rate by 25 basis points (bps)
Bank Muamalat Malaysia Bhd, chief economist Afzanizam Rashid, said the Federal Open Market Committee delivered the widely expected 25-bps reduction at its final meeting, which ended yesterday.
“The US Dollar Index fell 0.55% to 98.671 after the decision, and the meeting pointed to the possibility of further cuts in 2026 and 2027,” he told Bernama.
Afzanizam said the Fed may keep rates steady in the near term as it assesses the evolving economic outlook.
“For the ringgit, the upside potential for further appreciation is high, especially as Bank Negara Malaysia is unlikely to cut its policy rate.
“Expectations of a narrowing gap between the Federal Funds Rate and the overnight policy rate would support the ringgit, alongside the ongoing fiscal consolidation drive,” he said.
He added that Fitch Ratings’ latest review indicates confidence in Malaysia’s fiscal discipline.
“As such, the US dollar-ringgit pair should continue to trend positively. The local currency could even test a break below the RM4.10 level at closing today following the Fed’s decision,” he said.
At 8am, the ringgit firmed to 4.1010/4.1075 against the US dollar, its highest level since Oct 5, 2021, compared with 4.1155/4.1195 at yesterday’s close.
Meanwhile, the ringgit was mostly lower against major currencies at the opening.
It slipped vis-à-vis the Japanese yen to 2.6342/2.6388 from 2.6240/2.6267, fell against the British pound to 5.4896/5.4983 from 5.4781/5.4835, and weakened versus the euro to 4.7982/4.8058 from 4.7884/4.7930 at yesterday’s close.
However, the local currency strengthened against Asean units.
It improved against the Singapore dollar to 3.1737/3.1789 from 3.1748/3.1781 and firmed against the Indonesian rupiah to 245.7/246.2 from 246.5/246.9 previously.
The ringgit also opened higher vis-à-vis the Thai baht at 12.9112/12.9382 from 12.9243/12.9422 and was better against the Philippine peso at 6.92/6.94 from 6.95/6.96 yesterday. - FMT

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