Malaysian Ringgit Gains as US Economic Data Weakens

The Malaysian ringgit ended the trading week marginally higher against the US dollar, closing at 4.0835/4.0875. This follows a period of volatility where the currency initially closed flat at 4.0875/4.0930 after the Federal Reserve System maintained the federal funds rate between 3.50% and 3.75%.

The ringgit's late-week appreciation was driven by weaker-than-expected US economic indicators. Second-quarter 2026 GDP growth reached only 1.5%, missing the 2.1% consensus estimate, while the June Personal Consumption Expenditures price index moderated to 3.7% from 4.1% in May.

Despite these figures, losses for the US dollar remained limited. Mohd Afzanizam Abdul Rashid of Bank Muamalat Malaysia Bhd noted that the Fed's decision to hold rates was not unanimous, with three members favoring an increase. This suggests a potential rate hike at the next FOMC meeting on September 15 and 16. Rashid also indicated that rising crude oil prices could reverse the moderation in inflation seen in June, further supporting the US dollar's position.

While the ringgit gained against the US dollar, it traded lower against a basket of major global currencies, including the euro, British pound, and Japanese yen, as well as regional currencies such as the Singapore dollar and Thai baht.