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

KUALA LUMPUR: The Malaysian ringgit opened mixed against major and Asean currencies on Monday, as investors analyzed the Bank of Japan's (BOJ) rate hike announced on Friday. The local note slipped slightly against the US dollar today, opening at 4.0810/0865 compared to last Friday's close of 4.0795/0840. At 8am, the ringgit had eased to a lower level against the greenback, dropping from its closing value last Friday.

The Bank of Japan had raised its interest rates by 0.25 percent to 1.25 percent, marking its first hike since June and the highest level in 31 years. This move has raised concerns among analysts about the ease of unwinding the yen carry trade. Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, expressed that the higher crude oil prices could potentially keep inflation elevated in the country.

This situation could provide the US Federal Reserve with a reason to continue increasing interest rates by 25 basis points later in the year. He told Bernama that the Malaysian economy has performed well, with a growth rate of 5.2 percent last year and 5.7 percent in the first half of 2026. Thus, normalizing the overnight policy rate back to 3.00 percent would be a suitable decision.

Furthermore, Bank Negara Malaysia would be seen building up its policy buffer against potential future headwinds. Consequently, the ringgit might be well-supported and could remain stable within a narrow range, according to Dr Mohd Afzanizam. The ringgit exhibited mixed performances against a basket of major currencies at the opening.

The currency strengthened against the euro, opening at 4.6846/6909 from Friday's close of 4.6849/6901. However, it fell against the Japanese yen, trading at 2.5990/6027 from 2.5829/5860, and eased against the British pound, settling at 5.4641/4714 from 5.4543/4603. The local note also traded mixed against its Asean peers. It slipped against the Singapore dollar, opening at 3.1980/2026 from 3.1933/1971 last Friday, and depreciated against the Indonesian rupiah, going from 229.7/230.0 to 229.8/230.2.

Conversely, the ringgit appreciated against the Thai baht, opening at 12.2369/2585 from 12.2383/2562, and remained unchanged against the Philippine peso at 6.50/6.51.