Ringgit strengthens against US dollar amid growing expectations of rate cut

THE ringgit opened stronger against the US dollar on Monday, extending its positive momentum as expectations mount for a potential rate cut by the US Federal Reserve.

This development triggered a significant drop in the US Dollar Index (DXY), further boosting the local currency.

At 8 am, the ringgit strengthened to 4.4085/4210 against the greenback, compared to 4.4110/4145 at Friday’s close.

Bank Muamalat Malaysia Bhd Chief Economist Dr. Mohd Afzanizam Abdul Rashid noted today that the US DXY had dropped to 103.830 points, signaling potential for further appreciation of the ringgit.

He also pointed to a range of factors supporting the local currency's rally, including recent US job market data.

The figures suggest signs of a weakening labour market, with the labour force participation rate falling to 62.4%, the lowest since January 2023.

Additionally, the unemployment rate rose to 4.1% in February, up from 4.0% the previous month.

In a recent interview with Fox News, US President Donald Trump indicated that the US economy was in a period of transition, suggesting the economy was not headed toward a recession, though he noted economic uncertainties were on the rise.

"The degree of economic uncertainties has heightened as the tariff policies can be seen as inconsistent, leading to difficulties in assessing the impact on the broader economy," Dr. Mohd Afzanizam told Bernama.

As a result of these factors, market sentiment remains cautious in the near term, with the ringgit continuing to benefit from the shifting economic landscape.

The ringgit also saw gains against a basket of major currencies. It appreciated against the British pound, rising to 5.7011/7172 from 5.7070/7115 at Friday’s close.

The ringgit also surged against the euro, reaching 4.7876/8012 from 4.7903/7941, and strengthened against the Japanese yen to 2.9872/9961, up from 2.9909/9935.

The local currency performed well against several ASEAN currencies as well. It edged up against the Singapore dollar to 3.3152/3251 from 3.3185/3214 last Friday.

It also gained against the Thai baht, rising to 13.0657/1109 from 13.1124/1290, and saw a slight increase against the Indonesian rupiah to 270.5/271.4 from 270.6/271.0.

However, the ringgit remained unchanged against the Philippine peso, holding steady at 7.71/7.74 from the previous 7.71/7.73. – March 10, 2025