Ringgit ends almost flat against US dollar ahead of Q2 GDP data

Malaysia's currency, the ringgit, finished nearly unchanged against the US dollar as the market prepared for the country's upcoming GDP report. At 6pm, the ringgit was trading at 4.0850-0890 versus the greenback, down slightly from the previous close of 4.0835-0875. Bank Muamalat Malaysia's chief economist, Dr Mohd Afzanizam Abdul Rashid, explained that investors were adopting a wait-and-see attitude ahead of Bank Negara Malaysia and the Department of Statistics Malaysia's economic performance announcements.

Malaysia's second quarter GDP growth for 2026 expanded by 5.8% year-on-year, surpassing the 5.4% growth experienced in the first quarter. Mohd Afzanizam anticipated that the official GDP numbers could meet or even exceed expectations, based on data from the Industrial Production Index (IPI) and services activity measured by the sector's volume index.

The IPI rose by 6.5% y-o-y in June, while services activity increased by 5.9% y-o-y in the second quarter, driven by stronger wholesale and retail trade, food and beverage, and accommodation activities. Regarding the US dollar, the slight reduction in US inflation to 3.4% suggested that a rate hike decision at the Federal Open Market Committee's September meeting was not certain.

A rate hike decision was less attractive to investors than maintaining the current interest rate. The ringgit also strengthened against a basket of major currencies at the close, including the Japanese yen, British pound, and Indonesian rupiah, while weakening against the euro and Singapore dollar.