Ringgit ends higher against greenback on concerns over US fiscal health

KUALA LUMPUR — The ringgit ended higher on Wednesday as concerns over the fiscal health of the United States continued to weigh on the greenback.

At 6pm, the local note rose to 4.2685/2735 versus the US dollar from yesterday’s close of 4.2950/3010.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the recent sovereign downgrade by Moody’s Ratings on the credit rating of the United States has weighed on the US dollar.

“Other emerging market currencies are also gaining against the greenback. It remains to be seen whether such a trend can be maintained,” he told Bernama.

SPI Asset Management managing partner Stephen Innes said the ringgit today tracked a broadly weaker US dollar as capital rotation into Asia gained traction and speculation swirled ahead of the G7 summit in Canada.

“Market chatter suggests Washington may be preparing to float a currency clause as part of tariff rollback negotiations with Tokyo and Beijing — effectively nudging both the yen and yuan higher in exchange for trade de-escalation. If that narrative holds, it sets the stage for a softer dollar glide path, a backdrop that plays well for the ringgit,” he said.

The ringgit also firmed as exporters and institutional investors appeared to hedge against the rising US fiscal risk. “With the debt ceiling drama and budget gridlock once again paralysing the US Congress, there’s a growing sense that the greenback may face more structural downside pressure in the second half of the year,” he added.

Innes noted that traders are flagging signs of repatriation activity, with Malaysian corporates and real-money accounts trimming US asset exposure and rotating into local currency holdings, aligning with broader flows seen across Asia, where soft-dollar tailwinds are helping regional foreign exchanges (FX) outperform, even in the absence of strong local catalysts.

“Should the G-7 outcome include any language hinting at coordinated FX flexibility, especially from Japan or China, the ringgit may have further room to run. For now, the path of least resistance remains modest ringgit appreciation, anchored more to dollar fragility than domestic fundamentals,” he said.

At the close, the ringgit traded mostly higher against a basket of major currencies.

It appreciated versus the Japanese yen to 2.9642/9679 from yesterday’s 2.9727/9773, increased against the British pound to 5.7241/7308 from 5.7428/7509, but was slightly lower vis-à-vis the euro to 4.8379/8436 from yesterday’s 4.8340/8408.

The local note traded mostly higher against its ASEAN peers.

It went up vis-à-vis the Philippine peso to 7.67/7.68 from 7.72/7.73 on Tuesday, improved against the Singapore dollar to 3.3071/3115 from 3.3153/3202, and advanced against the Indonesian rupiah to 260.2/260.7 from 261.6/262.1 previously.

However, the ringgit declined against the Thai baht to 13.0121/0353 from yesterday’s 12.9856/13.0116. — BERNAMA