Ringgit weakens against US dollar, mixed against other major currencies

KUALA LUMPUR, Sept 2 — The Malaysian ringgit remained weaker against the US dollar on Wednesday, but showed strength against the British pound and the euro as global bond yields increased and worries about excessive government debt levels persisted. At 6pm, the ringgit was trading at 4.0435/0475 against the US dollar, marking a contrast to its previous close of 4.0370/0410.

The market had a holiday on Monday for the Merdeka Day celebration. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid highlighted that rising bond yields are the primary concern, particularly in developed markets. He explained that higher long-term bond yields could signify a greater inflation risk premium due to the rise in crude oil prices, and that global central banks might be lagging in tightening monetary conditions.

Dr Afzanizam emphasized the lack of fiscal discipline to control fiscal deficits and high government debt levels as the main worry. According to IMF data, by 2026, the United States, the United Kingdom, and Japan are expected to have gross government debts of 125.8%, 103.6%, and 204.4% of their respective GDPs. The market appeared uncertain, with traders and investors struggling to decide on the most advantageous asset class.

The ringgit fluctuated within a narrow range of RM4.0405 and RM4.0448 against the US dollar. Against a basket of major currencies, the ringgit strengthened against the euro (4.6787/6834) and the British pound (5.4527/4581), while it weakened against the Japanese yen (2.5294/5321). The local currency traded mostly lower against regional currencies, slightly improved against the Philippine peso (6.46/6.47) and fell against the Singapore dollar (3.1739/1773) and the Thai baht (12.1321/1488). The ringgit also dropped marginally against the Indonesian rupiah (227.6/227.9).