The ringgit opened higher against most major currencies on Thursday but eased slightly against the US dollar following US economic data that came in stronger than expected.
At 8:00 am, the ringgit stood at 4.0790/4.0860 against the US dollar, compared to 4.0785/4.0820 at Wednesday's close.
Bank Muamalat Malaysia Bhd Chief Economist Dr. Mohd Afzanizam Abdul Rashid noted that the final US GDP for the second quarter of 2026 expanded by 2.2%, surpassing market expectations of 1.5%, while ADP employment rose to 90,000 in September, exceeding the expected 73,000.
However, the Personal Consumption Expenditures (PCE) price index—a preferred inflation measure for the US Federal Reserve (Fed)—remained at 3.4% in August, lower than the expected 3.7%.
Afzanizam said the market is now reassessing the likelihood of a Fed rate hike in October; the probability, which previously exceeded 70%, has now dropped below 50%.
He expects the ringgit to trade within the RM4.08 to RM4.09 range against the US dollar, with attention now shifting to the US non-farm payrolls (NFP) data due for release on Friday.
Malaysian Economy Remains Strong
On the domestic front, Malaysia's economy grew by 6.0% in the second quarter of 2026, up from 5.4% in the first quarter, while growth for the first half of the year reached 5.7%.
Bank Negara Malaysia (BNM) projects the Malaysian economy to grow by around 5% in 2026, supported by domestic demand, investment, and export performance. OPR Remains at 2.75%
Bank Negara Malaysia (BNM) maintained the Overnight Policy Rate (OPR) at 2.75% during its September meeting.
The next monetary policy meeting is scheduled for November 5, 2026, with the current rate continuing to underpin the monetary policy stance as economic growth remains robust and price pressures stay contained.
Inflation Rises Slightly
Malaysia's inflation rose to 1.9% in August from 1.8% in July, while core inflation stood at 1.7%.
BNM had previously projected headline inflation for 2026 to fall within the 1.5% to 2.5% range, indicating that domestic price pressures remain at manageable levels.
Bond Inflows Continue to Provide Support
Malaysia's bond market also recorded strong demand from foreign investors, with net inflows reaching RM15.9 billion in August.
Of that total, RM10.6 billion was channeled into Malaysian Government Securities (MGS) and Government Investment Issues (GII), reflecting foreign interest in local fixed-income assets.
Ringgit Trades Higher
At the opening, the ringgit strengthened against the euro to 4.6203/4.6282 from 4.6324/4.6363, while also rising against the British pound to 5.4104/5.4197 and the Japanese yen to 2.5887/2.5933.
The ringgit also strengthened against the Singapore dollar and the Thai baht, while movements against the Indonesian rupiah and the Philippine peso remained largely unchanged. The ringgit's movement today remains influenced by US economic data and expectations regarding Federal Reserve policy, while investors also await Non-Farm Payroll (NFP) data, which could provide fresh clues on the direction of US interest rates.
