Ringgit opens mixed against major, Asean currencies after BOJ rate hike

KUALA LUMPUR: The ringgit's opening performance on Monday reflected investors' reaction to the Bank of Japan's (BOJ) rate hike on Friday. Throughout the day, the local currency experienced fluctuations against major and Asean currencies. At 8am, the ringgit was slightly lower against the US dollar, trading at 4.0810/4.0865, compared to last Friday's close of 4.0795/4.0840.

Following the BOJ's interest rate increase of 0.25% to 1.25%, concerns arose about the feasibility of unwinding the yen carry trade. Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid highlighted that higher crude oil prices might keep inflation elevated, potentially prompting the US Federal Reserve to continue raising interest rates by another 25 basis points later in the year.

Afzanizam noted that the Malaysian economy demonstrated solid performance with a 5.2% growth rate last year and a 5.7% growth in the first half of 2026. He believed that normalizing the overnight policy rate to 3.00% would be a prudent decision. Moreover, Bank Negara Malaysia could bolster its policy buffer to counter future headwinds, potentially supporting the ringgit within a narrow range.

The ringgit showed mixed performance against a basket of major currencies, with slight gains against the euro, declines against the yen and British pound, and mixed results against Asean currencies.