The Malaysian ringgit strengthened modestly against the US dollar last week, closing within the 4.27–4.30/USD range as global investors continued shifting capital away from US assets amid growing fiscal concerns in the United States.
Kenanga Research, in its weekly ringgit review, noted that the local currency’s performance was broadly in line with expectations, supported by a combination of global market dynamics and improving sentiment towards emerging market (EM) assets.
Despite a downgrade of the US sovereign credit outlook by Moody’s and renewed talk of sweeping tax cuts proposed by former President Donald Trump, the ringgit remained steady in early trading. Midweek, it gained traction on speculation that a quiet currency accord may be forming as part of broader trade negotiations, with the aim of weakening the greenback.
“The ringgit benefited from growing demand for non-dollar assets, particularly as the euro and other major currencies strengthened on hopes of a Ukraine-Russia peace deal,” said Kenanga.
Looking ahead, investor focus will return to the US economic calendar, particularly comments from Federal Reserve officials. Some policymakers are expected to advocate for only a single rate cut of 25 basis points this year, below the two cuts currently priced in by the market and forecasted by Kenanga. However, such a hawkish tone may not provide sustained support for the greenback, as broader concerns linger over the US fiscal trajectory and ongoing trade disputes.
In response to shifting global sentiment, Kenanga has sharply revised its end-2025 forecast for the USD/MYR exchange rate to 4.08 from 4.45, citing an anticipated reallocation of capital into more stable emerging markets.
“Despite local economic uncertainties tied to the tariff environment, the ringgit stands to benefit from global repositioning and an increasingly cautious outlook on US assets,” the research house said.
From a technical standpoint, the USD/MYR remains range-bound, trading close to its 5-day exponential moving average (EMA) of 4.27. Support is seen at 4.24, while resistance stands at 4.28.
With trade negotiations, US fiscal policy, and global risk sentiment in flux, analysts expect external developments to remain the key catalyst for the ringgit’s movement in the coming weeks.
