The Malaysian ringgit started trading today with a significant surge when it rose by 135 basis points to return to 3.96 against the US dollar.
At 10:17 am, the ringgit was at 3.9550 against the US dollar, up 0.45% since it opened early Tuesday in the Asian session.
The strengthening was driven by a change in global risk sentiment that became increasingly positive following expectations of a second round of talks between the US and Iran, thus easing geopolitical concerns that had previously weighed on the financial markets.
According to Bank Muamalat Malaysia Bhd Chief Economist, Dr Afzanizam Abdul Rashid, the latest developments in the energy market played a significant role in changing the direction of investor sentiment.
News of possible further talks between the two powers has pushed the prices of West Texas Intermediate (WTI) and Brent crude oil below $100 per barrel.
Meanwhile, the pressure on the US dollar as a safe haven currency eased as US Treasury yields fell.
The two-year and 10-year yields fell by two basis points to 3.77 per cent and 4.29 per cent respectively.
In parallel, the US Dollar Index (DXY) also fell 0.23 per cent to 98.425 points, reflecting reduced demand for the dollar amid a market environment increasingly inclined towards riskier assets.
Against other major currencies, the ringgit showed a mixed performance in the opening session.
The local currency traded lower against the pound to 5.3515/3671 from 5.3360/3454 previously, and depreciated against the euro to 4.6589/6725 from 4.6434/6516.
However, the ringgit registered a slight increase against the Japanese yen to 2.4867/4940 from 2.4875/4920 on Monday.
Among ASEAN currencies, the ringgit was mostly traded higher except against the Thai baht.
It strengthened against the Singapore dollar to 3.1105/1205 from 3.1145/1205, rose against the Indonesian rupiah to 231.5/232.3 from 232.2/232.8, and rose against the Philippine peso to 6.58/6.60 from 6.60/6.62 yesterday.
Conversely, the ringgit weakened slightly against the Thai baht to 12.3623/4071 from 12.3202/3503.
