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Malaysia

Ringgit Climbs in Value against the US Dollar and other Major Currencies

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  • The Ringgit has shown a notable increase against the US dollar, influenced by mild domestic demand and a weakening US dollar.
  • Economic indicators from the US, including the nonfarm payrolls and wage growth rates, suggest potential changes in the US Federal Reserve's monetary policy.
  • The Ringgit also appreciated against other major and ASEAN currencies, indicating a robust performance in the regional and global financial markets.

In a recent financial update, the Malaysian Ringgit has shown a promising increase against the US dollar and other significant global currencies. This rise is attributed to a combination of mild domestic demand for the Ringgit and a weakening US dollar, influenced by lower US Treasury yields.

Key Factors Influencing the Ringgit's Performance

Domestic Demand and US Dollar Fluctuations

The Ringgit's performance on Tuesday morning was noteworthy, as it appreciated to 4.7360/7405 against the US dollar from the previous day's close of 4.7380/7405. This improvement is primarily due to the mild demand for the Malaysian currency coupled with the dip in the US dollar's strength. The US Dollar Index (DXY), which tracks the dollar against a basket of other major currencies, dropped to 104.876 but later rebounded to 105.194 points.

Impact of US Economic Indicators

The US economic landscape, particularly the nonfarm payrolls (NFP) report for April, which showed a lower-than-expected job addition of 175,000 against the anticipated 238,000, also played a crucial role. This report, coupled with a cooling wage growth rate, suggests potential adjustments in the US Federal Reserve's monetary policy, which could favor emerging market currencies like the Ringgit.

Statements from Economic Experts

Mohd Afzanizam Abdul Rashid, the chief economist at Bank Muamalat Malaysia Bhd, highlighted the significance of these developments. He noted, "The US dollar was fairly stable with the US Dollar Index falling as low as 104.876 points but later rebounding to 105.194 points. This happened despite equity markets continuing to rally on Monday with the US Treasury yields remaining low last night." He further added that the Richmond US Federal Reserve president's optimism about achieving the inflation target could signal a more accommodative policy stance in the future.

Comparative Performance Against Other Currencies

Against Major Global Currencies

The Ringgit not only strengthened against the US dollar but also saw improvements against other major currencies. It appreciated against the Japanese yen, moving from 3.0806/0825 to 3.0755/0788. Similarly, it gained against the British pound, moving from 5.9604/9635 to 5.9522/9579, and saw a slight increase against the euro.

Performance Against ASEAN Currencies

The Ringgit's performance was mixed against ASEAN currencies. It showed a slight improvement against the Philippine peso, moving from 8.28/8.29 to 8.27/8.29.

Market Outlook and Future Predictions

The current trends suggest a cautiously optimistic outlook for the Ringgit, especially if the US continues on a path towards easing its monetary policy. The local currency's strength is likely to be supported further if the Federal Reserve shifts towards a more accommodative monetary stance in response to the US's current economic indicators.

The Malaysian Ringgit's recent performance against the US dollar and other major currencies paints a positive picture for Malaysia's economic outlook. With careful monitoring of global economic trends and domestic fiscal policies, the Ringgit could continue to see favorable movements in the forex markets.

This analysis provides a comprehensive overview of the factors driving the Malaysian Ringgit's value and offers insights into potential future movements in its exchange rate.

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