Malaysian Ringgit Volatility Follows Global Rate Hikes and US-Iran Peace

The Malaysian ringgit experienced significant volatility between June 16 and June 19, 2026, driven by central bank policies in Japan and the United States. The currency first fell to 4.0665/4.0700 against the US dollar on June 16 after the Bank of Japan raised its policy rate by 25 basis points to 1%, the highest level since 1995. This move was attributed to rising inflation and improved economic growth in Japan.

Pressure on the ringgit intensified by June 18, as the currency dropped further to 4.1145/4.1195. This decline followed market expectations that the United States Federal Reserve would implement a 25-basis-point interest rate hike later in the year, which spiked demand for the US dollar. Mohd Afzanizam Abdul Rashid, Chief Economist of Bank Muamalat Malaysia, noted that the ringgit's 1.29 percent depreciation on that day appeared excessive compared to other regional currencies.

On June 19, the ringgit opened higher at 4.1130/1225, recovering some losses. This rebound was fueled by improved market risk appetite following reports of a peace agreement between the United States and Iran. The deal is expected to reopen the Strait of Hormuz and mitigate concerns regarding global oil supply disruptions, leading the ringgit to strengthen against a basket of major and regional currencies.