The Malaysian ringgit is on a winning streak, marking its seventh consecutive day of gains—a trend that’s turning heads in the financial world. But here’s where it gets controversial: Is this rally truly sustainable, or are we overlooking a critical catch? Let’s dive in.
On Thursday, the ringgit opened stronger against the US dollar, fueled by the highly anticipated 25-basis-point rate cut by the US Federal Reserve. At 8 am, it stood at 4.1835/2050 per dollar, up from Wednesday’s close of 4.1850/1900. Sounds like smooth sailing, right? Not so fast. And this is the part most people miss: While the rate cut provided a boost, the future isn’t as clear-cut as it seems.
Dr. Mohd Afzanizam Abdul Rashid, Chief Economist at Bank Muamalat Malaysia Bhd, warns that monetary policy isn’t set in stone. The Federal Open Market Committee (FOMC) is divided, and the gap between the US federal funds rate (FFR) and Malaysia’s overnight policy rate (OPR) isn’t closing anytime soon. This means the US dollar could still look appealing to investors, potentially limiting the ringgit’s upward momentum.
After breaching the psychological RM4.20 mark against the dollar, the ringgit might face some profit-taking, with today’s range expected to hover between RM4.19 and RM4.20. Here’s the bold question: Could this be a temporary high, or is the ringgit poised for further growth? Let’s explore.
At the opening bell, the ringgit wasn’t just flexing against the dollar—it strengthened across the board. It climbed to 2.7383/7525 against the Japanese yen (from 2.7493/7528), 5.5189/5472 against the British pound (from 5.5326/5392), and 4.8533/8782 against the euro (from 4.8722/8780). Even among ASEAN currencies, it shone, improving to 3.2245/2416 against the Singapore dollar and 251.7/253.1 against the Indonesian rupiah. However, it barely budged against the Philippine peso, staying nearly flat at 7.12/7.16.
Now, for the thought-provoking twist: While the ringgit’s gains are impressive, the divided FOMC and the lingering rate gap raise questions about its long-term trajectory. Is this rally a sign of strength, or are we overlooking potential headwinds? Share your thoughts in the comments—let’s spark a debate!
