Ringgit rises on trade optimism amid US dollar strength

[MALAYSIA] The ringgit opened stronger against the US dollar today, buoyed by improved market sentiment stemming from recent developments in global trade tariffs involving major economies such as China and the United Kingdom, according to economists. At 8 am, the local currency advanced to 4.2715/2905 against the greenback, compared with Thursday’s closing rate of 4.2780/2830.

The slight appreciation in the ringgit’s value mirrors a broader market response to a reduction in geopolitical tensions, particularly following indications from Beijing of a readiness to resume trade talks with Western nations. Analysts believe that any progress in easing long-standing trade frictions could lend near-term support to emerging market currencies, including the ringgit.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said sentiment remains upbeat on expectations that ongoing trade discussions between the US and China may yield favourable outcomes this week.

"Optimism is largely driven by the recent US-UK trade agreement, which included tariff reductions on vehicles and steel products," he told. "That said, the 10 per cent tariff remains in place, indicating that some of the tariff-related shocks could still affect markets in the months ahead,” he added.

Meanwhile, investors are keeping a close watch on upcoming policy decisions by the US Federal Reserve. Any indications of extended periods of elevated interest rates could further bolster the US dollar, potentially limiting gains in the ringgit, especially if risk-averse sentiment returns to global markets.

Dr Afzanizam noted that the US Dollar Index (DXY) climbed 1.03 per cent to 100.64 points, while yields on US Treasury notes rose — with the 2-year and 10-year papers gaining 10 and 11 basis points to settle at 3.87 per cent and 4.38 per cent, respectively. "In light of these developments, the ringgit may face further corrections as the greenback continues to attract demand,” he said.

On the domestic front, steady economic indicators such as stable inflation and consistent export growth have provided a favourable backdrop for the ringgit. However, external pressures — including volatile commodity prices and shifts in investor appetite for emerging markets — remain key factors that could shape the currency’s direction in the near term.

In broader currency markets, the ringgit also posted gains against a range of major and regional currencies at the opening. The local unit strengthened against the Japanese yen to 2.9269/9401 from 2.9534/9571, appreciated versus the euro to 4.7960/8174 from 4.8264/8321, and rose against the British pound to 5.6555/6806 from 5.6769/6835 previously.

Among regional peers, the ringgit improved against the Singapore dollar to 3.2848/2999 from 3.2984/3025, and gained ground on the Thai baht at 12.9216/9885 from 13.0189/0404. It also edged up against the Philippine peso to 7.68/7.72 from 7.69/7.70, and firmed slightly against the Indonesian rupiah to 258.8/260.1 from 259.2/259.6.