The ringgit opened slightly higher against the US dollar on Tuesday, even as the US currency remained supported by expectations of higher interest rates and demand for safe-haven assets amidst global uncertainty.
At 8:00 a.m., the ringgit appreciated to 4.0835/4.0895 against the US dollar, up from 4.0845/4.0890 at Monday's close. Meanwhile, the US Dollar Index (DXY) rose 0.23% to 102.167 points.
Bank Muamalat Malaysia Bhd Chief Economist Afzanizam Rashid noted that the strengthening US dollar suggests the ringgit will likely continue to trade within a narrow range.
Malaysian Economy Remains Robust
Malaysia's economy expanded by 6.0% in the second quarter of 2026—up from 5.4% in the first quarter—driven by strong domestic demand and exports.
This growth serves as a key factor supporting the ringgit amidst global market uncertainty.
OPR Remains at 2.75%
Bank Negara Malaysia (BNM) maintained the Overnight Policy Rate (OPR) at 2.75% in September, with the next monetary policy meeting scheduled for November 5, 2026.
BNM also emphasized the need to monitor inflation risks arising from energy cost pressures and geopolitical tensions.
Slight Rise in Inflation
Malaysia's inflation rate rose to 1.9% in August, up from 1.8% in July. BNM had previously noted that price pressures were also influenced by rising external costs, including the impact of energy prices.
Strong Bond Inflows
Foreign demand for the Malaysian bond market continues to provide support for the ringgit. Foreign investors recorded a net inflow of RM15.9 billion in August, including RM10.6 billion in MGS and GII. This marked the largest monthly inflow since September 2013.
Ringgit Trades Mixed
Against major currencies, the ringgit strengthened versus the Japanese yen to 2.5847/2.5886 and the British pound to 5.3976/5.4055, but weakened against the euro to 4.5805/4.5872.
Among ASEAN currencies, the ringgit strengthened against the Thai baht to 12.1151/12.1390, yet eased slightly against the Singapore dollar to 3.1907/3.1957. The ringgit remained unchanged against the Philippine peso and the Indonesian rupiah.
Overall, the ringgit remains supported by domestic economic fundamentals and bond inflows; however, the strengthening US dollar and expectations of high US interest rates could limit the local currency's movement in the short term.
