[MALAYSIA] On March 21, 2025, Malaysia's currency, the Ringgit, opened weaker against the US dollar, retreating from recent gains. At the start of trading, the Ringgit stood at 4.4245/4360 against the US dollar, slightly lower than Thursday’s closing value of 4.4215/4270.
This retreat followed a period of fluctuating trends in global markets, particularly the US Federal Reserve’s stance on monetary policy. Despite the US Treasuries showing fluctuations, which initially saw declines before rebounding, the market reaction failed to provide strong signals that could significantly influence the Ringgit's movements.
Market Insights: Ringgit Faces Pressure Amid Global Uncertainty
Mohd Sedek Jantan, head of investment research at UOB Kay Hian Wealth Advisors Sdn Bhd, explained that the Ringgit was lacking clear directional cues, despite the shifts in US Treasuries. He stated, “Although US Treasuries experienced fluctuations yesterday, initially declining before rebounding, they ultimately closed unchanged, indicating a lack of immediate strong signals for capital flows that could significantly influence the ringgit’s movement.”
The situation was further complicated by the uncertainty surrounding global trade. “Moving forward, uncertainty persists as the US prepares to implement reciprocal tariffs on April 2, leaving markets on edge,” Jantan added. He noted that if market sentiment deteriorates, investors may flock to the US dollar as a safe-haven asset, which could put additional pressure on the Ringgit.
Impact of Domestic Economic Data
Domestically, Malaysian economic data was expected to play a role in influencing the Ringgit's performance. Dr. Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, noted that Malaysia's Consumer Price Index (CPI) for February would likely show a modest increase of 1.5 percent year-on-year, down slightly from the previous two months, which saw inflation holding steady at 1.7 percent. This “benign inflation reading” could signal that Bank Negara Malaysia would be comfortable with the current monetary policy and could maintain the overnight policy rate in the near term.
According to Dr. Afzanizam, the Ringgit was expected to trade within a narrow range of 4.42 and 4.43 against the US dollar on that day, underlining the market's cautious outlook.
Global Currency Trends and the Ringgit's Performance
While the Ringgit's performance against the US dollar garnered the most attention, it also weakened against other major global currencies. For instance, it slid against the Euro, dropping to 4.8028/8153 from 4.7973/8033, and against the British Pound, declining to 5.7368/7517 from 5.7276/7347. It also fell against the Japanese Yen, edging down to 2.9773/9852 from 2.9728/9767.
In the ASEAN region, the Ringgit showed mixed results. It lost some ground to the Singapore Dollar, falling to 3.3150/3241 from 3.3117/3164, and weakened slightly against the Philippine Peso to 7.73/7.76 from 7.72/7.74. Additionally, the Ringgit weakened against the Indonesian Rupiah, dropping to 268.3/269.2 from 268.1/268.6. However, it strengthened against the Thai Baht, rising to 13.
Outlook for the Ringgit in the Coming Days
Looking ahead, analysts are watching closely for any developments in the US Federal Reserve’s monetary policies, as well as trade developments, particularly the planned US tariffs. The situation is creating significant uncertainty for markets and could lead to further fluctuations in the Ringgit’s value.
As Jantan pointed out, the absence of strong signals from capital flows in the wake of US Treasury movements suggests that market participants are waiting for clearer guidance before making major adjustments. The Ringgit’s direction in the near term may depend largely on how risk sentiment evolves globally, with any deterioration potentially benefiting the US dollar as a safe-haven asset.
For now, the Ringgit’s performance against the US dollar remains relatively stable but under pressure, with investors closely monitoring both global and domestic factors that could influence its value in the coming weeks.
The Ringgit opened lower against the US dollar on March 21, 2025, after experiencing some recent gains. The currency's movement is influenced by both global factors such as the US Federal Reserve's monetary policy and ongoing trade tensions, as well as domestic economic indicators, including inflation. While the outlook for the Ringgit remains cautious, analysts expect it to remain within a narrow range in the short term, with global risk sentiment playing a key role in determining its direction.
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