The Ringgit’s Positive Momentum Against the US Dollar
On Friday, the Malaysian ringgit demonstrated a noteworthy strength against the US dollar, reflecting a broader narrative in the global economy characterized by uncertainty. This trend has been attributed primarily to weakening economic indicators in the United States, particularly against the backdrop of growing concerns around tariffs and fiscal policies.
Recent Exchange Rate Movements
At 8 AM, the ringgit improved to a rate of 4.2140/2335 compared to Thursday’s close of 4.2245/2295. This upward movement showcases the resilience of the Malaysian currency against the backdrop of a fluctuating dollar. Analysts, including Dr. Mohd Afzanizam Abdul Rashid, the chief economist at Bank Muamalat Malaysia Bhd, are closely monitoring the situation as market dynamics evolve.
Analysis of the US Dollar Index
The US Dollar Index (DXY) was reported to have slipped by 0.05 percent, landing at 98.741 points. This decline is significant, especially in light of new economic data suggesting that the US is heading towards a slowdown. One key indicator was the rise in initial jobless claims, which increased to 247,000 last week—marking the second week of consecutive increases. Continuous jobless claims also remained staggeringly high, sitting at 1.904 million for the week ending May 24, 2025.
Upcoming Economic Indicators
Looking forward, all eyes are on the upcoming Nonfarm Payroll (NFP) report due out in May, which is anticipated to be around 125,000— a significant drop from April’s figure of 177,000. Such data points will be crucial in shaping market sentiments and could either support or undermine the current trend of the ringgit against the greenback.
The Role of Emerging Markets
The dynamics affecting the ringgit are not isolated; they extend to a broader context involving emerging market currencies. This cohort has been experiencing an appreciation against the US dollar, largely attributed to a deteriorating economic outlook in the United States. Dr. Mohd Afzanizam highlighted that despite the US dollar traditionally being regarded as a safe haven during turbulent times, traders are currently gravitating towards other currencies, including the ringgit.
Tariff Policies and Market Sentiments
The ongoing uncertainty surrounding US tariff policies, coupled with recent tensions involving US President Donald Trump and notable figures like Elon Musk concerning government budgetary positions, adds an additional layer of complexity to market sentiments. Economic landscapes can shift rapidly based on these interactions and policy decisions. As a result, stakeholders are urged to maintain a vigilant stance as market dynamics unfold.
The Ringgit’s Performance Against Major Currencies
As the day began, the ringgit was mostly trading higher against a basket of major currencies. Specifically, it appreciated against the Japanese yen, reaching 2.9343/9481 from Thursday’s rate of 2.9495/9531. Similarly, it climbed against the British pound to 5.7226/7491 from 5.7301/7369. However, it experienced a slight dip against the euro, trading at 4.8263/8486 compared to the previous figure of 4.8235/8292.
Performance Against ASEAN Peers
The ringgit’s strong performance extended beyond major global currencies, as it also traded positively against most of its ASEAN counterparts. The currency gained ground against the Singapore dollar, moving to 3.2758/2915 from Thursday’s close of 3.2881/2922. It showed marginal improvement against the Indonesian rupiah as well, adjusting to 258.7/260.1 from 259.3/259.8.
Conclusions on Future Trends
Considering the existing market conditions, there is potential for the ringgit to continue its climb, with projections suggesting it could reach RM4.20 in the near term. Ultimately, the currency’s trajectory will hinge significantly on upcoming economic data and the ongoing developments in US economic policy.
Through all of this, the prevailing sentiment remains that effective and timely policy implementation will be essential in shaping the economic landscape moving forward. As the markets react, continued monitoring of these factors will be crucial for anyone invested in the dynamics of currency exchange.
