The Malaysian ringgit continues its upward trend, gaining against the US dollar for the fourth consecutive day. The strengthening is attributed to investor reassessments following the release of weaker US economic data.
The Malaysian ringgit strengthened for the fourth consecutive day against the US dollar, fueled by a reassessment of investor positions following the release of weaker US economic data. At 8 am, the ringgit traded at 4.4900/5050 against the greenback, compared to 4.5005/5050 at Thursday's close. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid attributed the ringgit's gains to a slide in the US Dollar Index and a decline in the 10-year US Treasury yield.
These indicators suggest that market participants anticipate the US Federal Reserve (Fed) to maintain its monetary easing bias. Weaker-than-expected US economic data, including December's retail sales and initial jobless claims, further supported this view. Dr Mohd Afzanizam noted that while the market remains mixed, the prospects for elevated inflation are evident. He pointed out that the incoming US administration's proposed measures are seen as inflationary. However, the ringgit is expected to exhibit a tight range in the near term due to potential permanent extensions of the 2017 tax cut measures, as favored by Treasury Secretary nominee Scott Bessent. Meanwhile, SPI Asset Management managing partner Stephen Innes observed that softer inflation data from the UK and US has provided some relief, suggesting that market fears may have been overstated. He highlighted that the latest consumer price index figures from these countries indicate easing underlying inflationary pressures, potentially encouraging the Bank of England and the Fed to continue their rate-cutting agendas this year. Innes also noted the strengthening Japanese yen, driven by rising expectations of a Bank of Japan rate hike, potentially as early as next week. A sharp decline in global bond yields has also contributed to the yen's rise, narrowing yield differentials with Japan and making yen assets more attractive. The ringgit's performance against other currencies was mixed. It strengthened against ASEAN currencies, including the Singapore dollar, Philippine peso, and Indonesian rupiah. However, it weakened against the British pound and Thai baht
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