Ringgit nearly flat ahead of Q2 GDP announcement

KUALA LUMPUR: The ringgit remained nearly flat against the US dollar ahead of Malaysia's upcoming second-quarter GDP figures, with investors maintaining a cautious stance. At 6pm, the currency was trading at 4.0850/4.0890 against the US dollar, down from Wednesday's close of 4.0835/4.0875. Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, explained that investors were taking a wait-and-see approach ahead of the economic data release from Bank Negara Malaysia and the statistics department (DoSM).

Malaysia's Q2 2026 GDP estimate expanded by 5.8% year-on-year, up from 5.4% in Q1 2026. Afzanizam suggested that the numbers were likely to meet or exceed expectations based on indicators such as the Industrial Production Index (IPI) and Malaysia's services activity. The IPI rose by 6.5% year-on-year in June 2026, while services activity grew 5.9% year-on-year in Q2, driven by sectors like wholesale and retail trade, food and beverage, and accommodation.

Afzanizam noted that the slight moderation in US inflation to 3.4% indicated that a rate hike at the Federal Open Market Committee's September meeting was not guaranteed. The US CPI data suggested that the Federal Reserve might maintain interest rates instead of increasing them further. As a result, Afzanizam pointed out that the interest rate differential between the US and Malaysia was becoming more attractive to investors.

The ringgit also strengthened against a basket of major currencies at the close, including the Japanese yen, British pound, euro, Philippine peso, Thai baht, Indonesian rupiah, and Singapore dollar.