The ringgit opened higher this morning against the US dollar and most major currencies, ahead of the presentation of the 13th Malaysia Plan (RMK13) by Prime Minister Datuk Seri Anwar Ibrahim, which is scheduled to be announced this afternoon.
At 9am, the ringgit strengthened to 4.2520 against the US dollar from 4.2410 yesterday.
Bank Muamalat Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid said investors expected the 13th Malaysia Plan (RMK13) allocation to drive domestic demand, especially in the construction-related sector.
He explained that increased development spending is expected to provide a boost to the country's economic growth, especially in the engineering and infrastructure sectors.
Meanwhile, the US Dollar Index (DXY) continued to rise to 99.82 points after the Federal Open Market Committee (FOMC) decided to maintain the Fed funds rate at 4.25 to 4.50%.
The Fed also downgraded its assessment of the economy, stating that economic activity in the US is expected to grow moderately in the first half of 2025. Second-quarter Gross Domestic Product (GDP) grew by 3.0%, largely contributed by a 30% decline in imports, leading to a more significant net export contribution.
However, the decision to maintain rates was not unanimous, with two Fed members voting for a 25 basis point cut in policy rates.
According to Mohd Afzanizam, although the Fed's monetary policy outlook is seen as more dovish, the large interest rate differential still favours the US dollar. Thus, the ringgit is expected to trade in the range of RM4.24 to RM4.25 today.
In the early trading session, the ringgit also strengthened against most major and regional currencies. It rose against the Japanese yen to 2.8394/8530 from 2.8646/8678 yesterday, strengthened against the British pound to 5.6161/6427 from 5.6745/6805, and gained against the euro to 4.8420/8649 from 4.8996/9048 previously.
The ringgit also traded higher against regional currencies, including the Singapore dollar which eased to 3.2695/2852 from 3.2919/2957, the Thai baht to 12.9433/13.0136 from 13.0528/0719, and the Indonesian rupiah to 258.2/259.6 from 258.5/258.9.
However, the ringgit remained flat against the Philippine peso at 7.36/7.40 from 7.36/7.38 yesterday.
