THE ringgit continued its upward momentum against the US dollar for the fifth consecutive day, driven by growing uncertainty surrounding US trade policies, which have prompted traders and investors to steer clear of riskier assets.
At 8 a.m. on Friday, the local currency rose to 4.4185/4315 against the US dollar, an improvement from Thursday’s close of 4.4230/4270.
This upward movement follows a significant development on Thursday, when US President Donald Trump signed executive actions delaying tariffs on various goods from Mexico and Canada under the US-Mexico-Canada Agreement (USMCA), Bernama cited today.
The delay, which pushes back the tariffs for nearly a month, has helped ease near-term trade tensions, boosting investor sentiment, especially towards emerging market currencies like the ringgit.
Mohd Sedek Jantan, Head of Investment Research at UOB Kay Hian Wealth Advisors, explained that the tariff delay helped reduce immediate trade frictions, making emerging market currencies more attractive. “This move has alleviated near-term trade pressures, supporting investor sentiment towards emerging market currencies, including the ringgit,” he told Bernama.
Additionally, he highlighted that the widening of the US trade deficit to a record high in January further exacerbated external imbalances, as businesses accelerated imports in anticipation of tariff hikes. This added to the positive sentiment towards emerging market currencies, including the ringgit.
Despite the positive outlook, he also noted the ongoing trade policy uncertainty, with Trump’s remarks branding Canada and India as "high-tariff nations."
“This rhetoric indicates that trade policy volatility may persist, which could lead to fluctuations in global markets,” he added.
However, he remains optimistic in the short-term, stating, "From a strategic standpoint, the temporary reprieve in trade tensions supports a more constructive outlook for the ringgit in the near term."
On a broader scale, Dr. Mohd Afzanizam Abdul Rashid, Chief Economist at Bank Muamalat Malaysia Bhd, pointed out that the Malaysian central bank, Bank Negara Malaysia (BNM), has shown caution regarding the global economic outlook.
However, he noted that BNM seems inclined to keep the overnight policy rate (OPR) unchanged for the near future.
“BNM’s cautious stance suggests they may maintain the OPR steady in the near term,” he said.
Dr. Mohd Afzanizam also provided technical insight, stating that the USD/MYR pair was currently in neutral territory.
This suggests that the ringgit could trade within a narrow range, likely oscillating between 4.42 and 4.43 against the US dollar in the near term.
The ringgit also strengthened against several other major currencies on Friday. It gained against the Japanese yen, reaching 2.9833/9922, up from 2.9940/9969 the previous day.
It also firmed against the British pound to 5.6919/7087 from 5.6964/7015 and rose against the euro to 4.7662/7803 from 4.7773/7816.
In regional trade, the ringgit was mostly stronger against other ASEAN currencies. It improved against the Indonesian rupiah to 270.4/271.3 from 270.6/271.0, edged up against the Thai baht to 13.0880/1424 from 13.0939/1124, and strengthened against the Singapore dollar to 3.3147/3247 from 3.3186/3218.
However, it remained unchanged against the Philippine peso at 7.71/7.73.
Despite some uncertainty in the global trade landscape, the Malaysian ringgit’s positive performance in recent days reflects a temporary boost in investor confidence due to the tariff reprieve and stabilizing trade tensions. – March 7, 2025
