The ringgit started trading today on a stronger note as it jumped to 3.94 against the United States (US) dollar, reflecting investors' increased confidence in global geopolitical developments.
At 10:05 am, the ringgit was at 3.9430 against the US dollar, up 0.15% since it opened early Wednesday in the Asian session.
The strengthening was seen as driven by positive sentiment following reports of a possible second round of talks between the US and Iran, which could potentially ease tensions in the Middle East and further stabilise international financial markets.
Bank Muamalat Malaysia Bhd Chief Economist Mohd Afzanizam Abdul Rashid explained that expectations of diplomatic progress had helped boost investors' risk appetite.
However, he reminded that the global economic outlook still faces challenges as the International Monetary Fund (IMF) projects that world Gross Domestic Product (GDP) growth will moderate to 3.31 percent in 2026 and 3.2 percent in 2027, compared to 3.4 percent recorded in 2025.
According to him, the main risk that continues to overshadow the market is the possibility of conflict in Iran which could trigger inflationary pressures, particularly through rising energy prices.
At the same time, increased defense spending may provide a short-term boost to GDP, but risks diverting resources from the more critical social sector.
This uncertainty makes currency movements more cautious, with the ringgit expected to be traded in a narrow range in the near term.
Along with the strengthening of the ringgit, the US Dollar Index also showed weakness when it fell by 0.25 percent to 98.121 points.
At the opening session, the ringgit was also traded higher against several major world currencies.
It rose against the euro to 4.6520/6614 from 4.6567/6620 and strengthened against the Japanese yen to 2.4828/4880 from 2.4847/4877 at Tuesday's close.
However, the ringgit's performance was slightly depressed against the British pound as it fell to 5.3522/3631 from 5.3495/3556.
Regionally, local currencies also performed well as most traded higher against ASEAN currencies.
The ringgit rose against the Singapore dollar to 3.1023/1091 from 3.1053/1091, strengthened against the Indonesian rupiah to 230.2/230.8 from 230.6/231.0, and rose against the Philippine peso to 6.58/6.60 from 6.59/6.61 previously.
However, it weakened slightly against the Thai baht to 12.3211/3546 from 12.3183/3397.
