Key Takeaways:
- Ringgit strengthens against US dollar on improved buying interest and market positioning.
- US Dollar Index eased to 97.96 as traders awaited the Fed’s December minutes.
- Local currency also firmed versus major currencies and ASEAN peers, including the Singapore dollar and Thai baht.
- Analysts say cautious sentiment persists ahead of further US policy guidance.
Ringgit Strengthens Against US Dollar as Buying Interest Improves
The Malaysian ringgit finished marginally firmer against the US dollar and a basket of major currencies on Tuesday, supported by renewed buying interest and subdued demand for the greenback.
Ringgit strengthens against US dollar
At the close of trade the local unit was quoted at 4.0460/0505 against the US dollar, improving from Monday’s 4.0580/0625. The modest gain came as the US Dollar Index, which tracks the dollar against a group of six major peers, eased to 97.96, down 0.05 per cent on the day.
Market participants maintained a cautious stance ahead of the release of the Federal Open Market Committee’s minutes for December. Traders said they were reluctant to commit to large directional bets until the fresh policy insight was available, leaving currency moves relatively measured.
Against other major currencies the ringgit also closed firmer. It appreciated slightly versus the Japanese yen to 2.5948/5978 from 2.5956/5987, inched up against the euro to 4.7621/7674 from 4.7787/7840, and strengthened versus the British pound to 5.4678/4738 from 5.4742/4803.
On a regional basis the ringgit outperformed several ASEAN neighbours. It rose against the Singapore dollar to 3.1526/1566 from 3.1572/1610 and gained ground versus the Thai baht to 12.8404/8620 from 12.8985/9190. The local note also firmed against the Indonesian rupiah, quoted at 241.2/241.6 compared with 241.7/242.1 previously, and strengthened marginally versus the Philippine peso at 6.87/6.88 from 6.90/6.91.
Analysts described the moves as typical of a cautious market that is waiting for further cues from global policy makers. “The ringgit’s small gain reflects intermittent buying interest and a softer dollar tone ahead of the Fed minutes,” said a local foreign exchange strategist. “That said, any sustained trend will depend on the content of those minutes and subsequent market reaction to US inflation and interest-rate signals.”
Domestic factors have been relatively quiet, with no major macroeconomic surprises reported on Tuesday. As such, regional developments and the dollar’s broader performance continued to be the principal drivers of the ringgit’s short-term direction.
Market participants will watch upcoming data releases and central bank communications closely for fresh impetus. In particular, comments from the US Federal Reserve that hint at changes in rate expectations are likely to influence capital flows and risk appetite across Asia, including demand for the ringgit.
For now, the ringgit’s modest appreciation provides a limited positive note for Malaysian importers and businesses with foreign currency revenues, while exporters may face slightly less competitive currency conditions. Traders expect volatility to remain contained unless the Fed minutes reveal a markedly different assessment of economic growth and inflation than markets currently expect.
Reporting by Bernama. Market figures at close were supplied by local dealers and reflect prevailing interbank rates.
