Ringgit Slips Ahead of Bank Negara Meeting

The ringgit opened lower against the US dollar ahead of Bank Negara Malaysia's Monetary Policy Committee meeting. Economists are divided over the likelihood of an Overnight Policy Rate cut, with some expecting a 25-basis-point cut due to rising downside risks in H2 2025. The ringgit is expected to trade within a narrow range between RM4.23 and RM4.24.

Title: Ringgit's Movement and Bank Negara's Rate Decision Ahead of MPC Meeting

The ringgit opened lower against the US dollar ahead of Bank Negara Malaysia's Monetary Policy Committee (MPC) meeting scheduled for July 9. Economists are divided over the likelihood of an Overnight Policy Rate (OPR) cut, with some expecting a 25-basis-point reduction due to rising downside risks in the second half of 2025. The ringgit is expected to trade within a narrow range between RM4.23 and RM4.24.

The surprise US decision to raise its threatened tariff on Malaysia to 25% has added uncertainty to the country's economic outlook. This move has increased the likelihood of interest rate cuts by Bank Negara Malaysia to support the economy. Analysts at Bank Muamalat Malaysia, for instance, predict a 25-basis-point cut in the OPR, citing the need for monetary support given the challenging macroeconomic outlook for the second half of 2025 [2].

The ringgit's performance is expected to be influenced by the central bank's decision. The local currency has appreciated 5.5% against the dollar this year, partly due to firms repatriating overseas income. However, the outlook remains heavily dependent on any trade agreement with the US [3].

Malaysia's benchmark stock index fell as much as 0.7% today, while the ringgit underperformed most of its Asian peers. Officials have signaled their commitment to continuing engagement with the US to reach a balanced and mutually beneficial trade agreement [2].

Inflation in Malaysia has remained persistently low, prompting the central bank to project it will come in below 3% this year. The government is set to reduce some gasoline subsidies in the second half of the year, which is expected to have a contained impact on price pressures [2].

The ringgit's performance is also influenced by external factors such as global demand, geopolitical tensions, and domestic activity. The central bank may reiterate that the ringgit's performance is primarily driven by these external factors [3].

In conclusion, the ringgit's movement ahead of the MPC meeting is closely tied to Bank Negara Malaysia's decision on the OPR. The currency is expected to trade within a narrow range, with analysts predicting a potential 25-basis-point cut to support the economy amid rising downside risks.

References
[1] https://www.nst.com.my/business/corporate/2025/07/1241516/neighbours-cut-rates-all-eyes-bank-negaras-next-move
[2] https://www.freemalaysiatoday.com/category/nation/2025/07/08/us-clouds-malaysias-rate-path-with-surprise-threat-of-25-tariff
[3] https://www.malaymail.com/news/money/2025/07/06/ringgit-likely-range-bound-next-week-as-market-waits-on-bnms-next-move-says-analyst/182946