The Malaysian ringgit weakened to 3.97 against the US dollar on Thursday, retreating from the 3.95/USD level seen earlier in the week as renewed geopolitical tensions in the Strait of Hormuz boosted demand for the greenback as a safe-haven asset.
Market analysts said the currency came under pressure after reports of Iranian vessel seizures in the Strait of Hormuz despite an extension of the ceasefire, reigniting concerns over prolonged supply disruptions and elevated global oil prices.
The fresh uncertainty dampened investor risk appetite, prompting a shift away from pro-growth emerging market currencies such as the ringgit and into the US dollar.
The move higher in USD/MYR also reflected growing worries over sustained oil-price pressure and its potential inflationary spillover, particularly through higher fuel and fertiliser costs, which could weigh on regional economic sentiment.
Attention is now turning to a crucial week of monetary policy decisions from major central banks, including the Bank of Japan, the US Federal Reserve, the European Central Bank and the Bank of England.
Markets are expected to closely scrutinise policy guidance for signs of how central banks intend to manage the inflationary effects of the oil shock.
The Bank of Japan may adopt a more hawkish stance on policy normalisation, while the Federal Reserve is widely expected to keep rates unchanged with cautious commentary. Meanwhile, the ECB and BoE are likely to remain constrained by persistent inflation, limiting room for policy easing.
Analysts maintain their base case that a permanent ceasefire could be reached by the end of the second quarter of 2026, which would likely unwind much of the recent oil price surge.
However, they cautioned that inflation relief may be delayed due to lagged effects from energy and fertiliser costs, which could postpone any near-term monetary easing.
The Fed is expected to remain on pause before considering rate cuts only in the fourth quarter of 2026.
For now, investors are likely to maintain cautious positioning in emerging markets while awaiting diplomatic progress and clearer policy signals from global central banks.
Analysts expect the USD/MYR pair to consolidate within the 3.94 to 3.98 range, with a mild downside bias should de-escalation efforts show sustained progress.
From a technical perspective, USD/MYR remains neutral near the 3.96 level, with immediate resistance seen at 3.98 and support at 3.96.
