THE ringgit continued its upward momentum on Wednesday, opening marginally higher against the US dollar as the greenback weakened following the release of the Federal Open Market Committee (FOMC) meeting minutes overnight.
At 8am, the local currency strengthened to 4.0425/0540 against the US dollar, compared with Tuesday’s closing level of 4.0460/0505.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the FOMC minutes initially provided some support to the US dollar but warned that any move towards monetary easing amid elevated inflation risks could undermine the credibility of US monetary policy.
“The US Dollar Index (DXY) rose 0.21 per cent to 98.238 points as US Federal Reserve (Fed) officials were divided on the outlook for the Fed funds rate, with some favouring a move closer to the neutral level to forestall a slowdown in the labour market,” he said.
“However, easing policy in a higher-inflation environment could backfire and weaken monetary policy credibility. On that basis, the ringgit may trade between RM4.05 and RM4.06 today,” he told Bernama.
IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said the minutes signalled that any future interest rate cuts would likely be slower, more contested and more data-dependent than previously expected.
“By revealing a deeply divided committee and a willingness to keep policy restrictive for longer if inflation risks persist, the Fed has effectively lifted the expected path of US real interest rates,” he said.
“This strengthens the dollar’s yield and safe-haven appeal, weighing on emerging market currencies, including the ringgit,” he added.
In early trading, the ringgit also advanced against a basket of major currencies. It strengthened against the Japanese yen to 2.5850/5926 from 2.5948/5978 on Tuesday, rose against the British pound to 5.4440/4595 from 5.4678/4738, and appreciated versus the euro to 4.7479/7614 from 4.7621/7674.
Against regional peers, the ringgit recorded mixed performance. It gained against the Singapore dollar to 3.1474/1566 from 3.1526/1566, was little changed against the Indonesian rupiah at 241.0/241.8 from 241.2/241.6, and was almost flat versus the Philippine peso at 6.87/6.89 from 6.87/6.88.
However, it weakened slightly against the Thai baht, easing to 12.8460/8924 from 12.8404/8620 previously. - December 31, 2025
