Ringgit Rises Against US Dollar Amid Growing Odds of Rate Cut

The Malaysian ringgit rose against the US dollar on Friday, extending gains, following US economic data that reinforced expectations of an imminent interest rate cut at the Federal Reserve's next policy meeting. The ringgit opened firmer at 4.2205/2405 against the greenback, and is expected to hover around RM4.22 to RM4.23 today.

The Malaysian ringgit (MYR) rose against the US dollar (USD) on Friday, extending its gains, following US economic data that reinforced expectations of an imminent interest rate cut at the Federal Reserve's next policy meeting. The ringgit opened firmer at 4.2205/2405 against the greenback and is expected to hover around RM4.22 to RM4.23 today [1].

The strengthening of the ringgit can be attributed to growing market speculation that the US Federal Reserve (Fed) may ease interest rates in the near term. Bank Muamalat Malaysia Bhd’s Chief Economist, Mohd Afzanizam Abdul Rashid, noted that recent remarks by senior Fed officials have hinted at possible shifts in monetary policy to address a softening labor market. He projected the ringgit to trade within the 4.21 to 4.22 range against the US dollar throughout the day, aligning with prevailing global financial market sentiment [1].

Despite its gains against the US dollar, the ringgit showed a mixed performance against major currencies. It depreciated against the Japanese yen and the British pound, and also lost ground against the euro. Within the ASEAN region, the ringgit eased against the Singapore dollar and the Thai baht. However, it gained strength against several regional currencies, appreciating against the Philippine peso and rising against the Indonesian rupiah [1].

Meanwhile, US President Donald Trump has nominated Council of Economic Advisers Chairman Stephen Miran to serve as a Federal Reserve governor, filling the seat vacated by Fed Governor Adriana Kugler. Miran’s appointment, which is subject to Senate approval, will take over from Kugler, who is returning to her tenured professorship at Georgetown University. The nomination is seen as a move by the Trump administration to have a more direct route to pursue easier monetary policy [2, 3].

The appointment of Miran comes as the Fed is expected to consider a rate cut at its upcoming Federal Open Market Committee (FOMC) meeting on September 16-17. Several central bankers have expressed concerns about labor market weakness, and at least a couple have expressed renewed confidence that tariffs may not push up inflation as much as earlier thought [3].

The strengthening of the ringgit against the US dollar is a reflection of market expectations that the Fed may take a more accommodative stance in its monetary policy. This move could positively impact the ringgit by narrowing the interest rate differential with the Overnight Policy Rate (OPR) in Malaysia [1].

References:
[1] https://www.thevibes.com/articles/business/111326/ringgit-strengthens-against-u.s-dollar-amid-fed-rate-cut-speculation
[2] https://news.bloomberglaw.com/banking-law/trump-names-miran-to-fill-seat-on-federal-reserve-board
[3] https://asia.nikkei.com/spotlight/trump-administration/trump-to-nominate-stephen-miran-to-fill-open-spot-on-federal-reserve-board