THE ringgit is expected to trade near the 4.00 level against the US dollar next week as investors weigh the economic impact of a prolonged conflict in West Asia.
Kenanga Investment Bank Bhd (Kenanga IB) noted that market participants are likely to remain overweight on the greenback as a hedge against renewed escalation once the US 10-day pause on strikes targeting Iran’s energy infrastructure concludes.
“The ringgit’s initial outperformance faded in a late-cycle correction, as the benchmark Brent crude oil holding near US$100 (RM392) per barrel has heightened US inflation concerns.
Consequently, investors have priced in a more hawkish Federal Reserve, supporting the greenback,” Bernama cited Kenanga IB saying in a note on Friday.
The bank anticipates the West Asia conflict to extend into the third quarter of 2026, keeping the Fed’s policy restrictive until the final quarter of the year.
Meanwhile, Bank Muamalat Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid observed that former US President Donald Trump’s 10-day extension for Iran to reopen the Strait of Hormuz had failed to calm the crude oil market.
“The growing concerns among Fed members regarding rising inflation risks, which now outweigh worries about weak employment, have created a policy dilemma for the US central bank.
“As such, the ringgit is likely to stay weak, maintaining its current trajectory of around RM4.00 versus the US dollar in light of the heightened economic fallout from the oil shock,” Dr Mohd Afzanizam told Bernama.
Over the past week, the ringgit fluctuated between RM3.92 and RM3.99 against the US dollar, before losing momentum and reaching RM4.00 at midday on Friday amid increasing demand for the safe-haven greenback.
Market sentiment has been influenced by growing scepticism over a potential ceasefire in Iran.
On a week-on-week basis, the ringgit settled lower at 4.0105/0140 against the US dollar, compared with 3.9330/9415 at the previous week’s close.
The local currency also eased against a basket of major currencies. It fell versus the Japanese yen to 2.5084/5109 from 2.4716/4771, weakened against the British pound to 5.3368/3414 from 5.2246/2359, and declined against the euro to 4.6197/6237 from 4.5139/5237.
Among Asean peers, the ringgit depreciated against the Singapore dollar to 3.1164/1194 from 3.0671/0740, slipped versus the Thai baht to 12.1903/2077 from 11.9872/12.0204, fell against the Indonesian rupiah to 236.1/236.5 from 231.4/232.0, and eased against the Philippine peso to 6.62/6.63 from 6.54/6.56.
Analysts caution that unless the geopolitical and oil market uncertainties subside, the ringgit is likely to remain under pressure, with the US dollar continuing to benefit from safe-haven inflows and expectations of sustained Federal Reserve tightening. - March 28, 2026
