THE ringgit opened stronger against the US dollar on Tuesday, buoyed by renewed market confidence following the government’s announcement of targeted fuel subsidies under the Budi Madani RON95 (BUDI95) programme.
The currency extended its upward momentum amid broader US dollar weakness.
At 8am, the ringgit appreciated to 4.1885/2085 against the greenback from Monday’s close of 4.1945/2040, reflecting positive sentiment surrounding the government's subsidy rationalisation efforts and commitment to fiscal reform.
Bank Muamalat Malaysia Bhd’s chief economist, Dr Mohd Afzanizam Abdul Rashid, said the move to reduce the price of RON95 to RM1.99 per litre from RM2.05, effective 30 September 2025, demonstrated a pragmatic and disciplined approach to public finance.
“The RON95 subsidy rationalisation shows the authorities are taking a pragmatic approach to uphold fiscal discipline. At the same time, efforts are being made to ensure the risk of higher living costs does not erode consumers’ purchasing power,” he said.
He added that the integration of technology via MyKad as a tool for subsidy management is a credit-positive development.
“Perhaps there will be more fine-tuning on how subsidies can be further rationalised, focusing on income levels. On that note, such a move can be constructive for the ringgit in the mid to long term,” he told Bernama.
SPI Asset Management managing director Stephen Innes echoed this optimism, noting that the subsidy scheme – which offers 300 litres of subsidised RON95 per month to Malaysians – has effectively boosted household disposable income.
“With less money spent on fuel, consumers have more to spend elsewhere, offering additional support to the local economy. This, combined with global US dollar weakness, positions the ringgit to continue trading on a favourable trajectory today,” said Innes.
Contributing further to the ringgit’s rise was a 0.31 per cent decline in the US Dollar Index (DXY) to 97.34 points, as markets digested mixed signals from Federal Reserve officials regarding interest rate policy.
“Atlanta Fed President Raphael Bostic, St. Louis Fed President Alberto Musalem and Cleveland Fed President Beth Hammack were in the hawkish camp,” said Mohd Afzanizam.
“Meanwhile, Fed board member Stephen Miran, who voted for a 50 basis point cut at the last Federal Open Market Committee meeting, said the neutral rate is at 2.0 per cent, suggesting the current monetary policy stance is highly restrictive.”
At the opening, the ringgit also recorded gains against most major and regional currencies. It strengthened to 2.8352/8488 against the Japanese yen and to 5.6595/6865 against the British pound, while slightly easing to 4.9420/9656 against the euro.
Among Asean currencies, the ringgit advanced to 3.2672/2830 against the Singapore dollar, 13.1822/2518 against the Thai baht, and edged up to 7.34/7.38 against the Philippine peso. It held steady against the Indonesian rupiah at 252.1/253.4.
The combination of sound fiscal policy, targeted subsidy mechanisms and global currency dynamics continues to support the ringgit’s short-term resilience. - September 23, 2025
