The ringgit started trading today with a mixed performance, as it was seen strengthening against most major world currencies but depreciating slightly against the US dollar.
At 10:18 am, the ringgit was at 3.9700 against the US dollar, down 0.25% since it opened early Monday in Asian trading.
This movement reflects the increasingly cautious global market sentiment following the escalating geopolitical uncertainties, particularly involving tense relations between the US and Iran.
In the uncertain market environment, investors are seen more inclined to switch to safe assets such as the US dollar.
This situation indirectly puts pressure on developing country currencies including the ringgit.
Chief Economist of Bank Muamalat Malaysia Bhd, Mohd Afzanizam Abdul Rashid, explained that the outlook for the ringgit in the near term is expected to remain cautious following changes in market sentiment driven by global risks.
Tensions have become more pronounced as negotiations between the US and Iran have reportedly stalled, raising concerns about global economic stability and energy security.
In addition, reports of possible sanctions by US President Donald Trump on the strategic Strait of Hormuz route have sparked a new wave of concern among investors.
The direct impact of this development can be seen when global crude oil prices surged past US$100 per barrel.
The rise in the price of this major commodity has also supported the strengthening of the US dollar, as measured by the US Dollar Index (DXY) which rose to 99.115 points.
In this situation, the ringgit is expected to continue to face pressure and potentially depreciate to around RM4.00 against the US dollar.
In addition to geopolitical factors, the US administration's actions to implement sanctions on maritime traffic involving Iranian ports have also added pressure to the market.
This measure, which has been implemented, has a direct impact on global trade flows, thus further increasing demand for the US dollar as a hedge currency.
Despite facing pressure from the US dollar, the ringgit still showed resilience as it traded higher against several other major currencies such as the British pound at 5.3167/3522 from 5.3248/3322, rose against the Japanese yen to 2.4858/5025 from 2.4882/4918 and strengthened against the euro to 4.6344/6653 from 4.6401/6465 last Friday.
Regionally, the ringgit's performance was mixed as it strengthened against the Singapore dollar to 3.1065/1275 from 3.1093/1139 and rose against the Thai baht to 12.2587/3493 from 12.3289/3525 while declining against the Indonesian rupiah to 232.0/233.7 from 231.6/232.0 and lower against the Philippine peso to 6.61/6.66 from 6.60/6.62 previously.
