KUALA LUMPUR: The ringgit extended its gains against the US dollar and other major currencies on Thursday, closing firmer following Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent.
The decision was made during the central bank’s final Monetary Policy Committee meeting of the year.
At 6 pm, the local note rose to 4.0445/0490 against the greenback from Wednesday’s close of 4.0610/0660.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the decision to keep the OPR unchanged at 2.75 per cent was in line with estimates.
He said BNM was positive about the current state of the economy, with 2026 gross domestic product (GDP) growth expected to settle above 5.0 per cent.
“At the same time, the balance of risks are seen to be stable although concerns on higher inflation going forward warrant a cautious stance.
“On that note, the case for a 25-basis-point hike in OPR during 2027 should not be ruled out and perhaps it could happen in the first quarter of 2027. As such, this could provide further support to the ringgit,” he told Bernama.
Mohd Afzanizam also said the US midterm elections were a key driver of market sentiment on Thursday, as a Democrat-controlled Congress could mean greater scrutiny of President Donald Trump’s administration and its policies.
“Consequently, Brent crude oil fell below US$100 per barrel to US$95.12 per barrel currently, while the US Dollar Index (DXY) fell by 0.14 per cent to 101.423 points,” he said.
Meanwhile, SPI Asset Management managing partner Stephen Innes said market sentiment was also supported by a decline in US Treasury yields following the sharp overnight drop in crude oil prices, as the geopolitical risk premium was effectively stripped from the oil market.
He said traders were increasingly convinced that a return to conflict with Iran was unlikely, easing inflationary concerns in the US bond market.
“The currency is taking its cues from external developments rather than domestic monetary policy. That said, the US dollar has not weakened significantly, and I expect that’s because the US Federal Reserve (Fed) is still expected to raise rates in December.
“Until those expectations begin to unwind, there’s probably a limit to how far the ringgit can appreciate. For now, the direction of crude oil prices and the Fed’s reaction function are the two big moving parts for Asian currencies, including the ringgit,” he added.
The ringgit traded higher against a basket of major currencies.
It strengthened against the Japanese yen to 2.5548/5578 from 2.5636/5669 at Wednesday’s close, appreciated against the euro to 4.5428/5478 from 4.5723/5779, and edged up against the British pound to 5.4455/4516 from 5.4783/4850.
However, the ringgit performed mostly lower against its ASEAN peers.
The local currency gained against the Singapore dollar to 3.1679/1717 from the previous close of 3.1771/1813, but slipped against the Thai baht to 12.1013/1199 from 12.0673/0868, edged down against the rupiah to 223.6/224.0 from 223.5/223.8, and fell against the Philippine peso to 6.42/6.43 from 6.39/6.40.
