Ringgit opens higher against US dollar as oil prices ease

The Malaysian ringgit began the day at a favorable rate against the US dollar on Wednesday, buoyed by a drop in Brent crude oil prices and reduced geopolitical tensions. By 8am, the currency was trading at 4.0680/4.0765 against the greenback, up from Tuesday's closing rate of 4.0730/4.0775. Afzanizam Rashid, chief economist at Bank Muamalat Malaysia Bhd, attributed this positive movement to the impact of lower crude oil prices, which currently sit at $99.25 per barrel.

Rashid noted that the recent US-Iran meeting at the UN General Assembly had been viewed positively by US President Donald Trump, sparking hope for a potential peace agreement. However, he emphasized that the situation is still fluid. Additionally, he highlighted that Federal Reserve officials had not provided clear signals regarding their monetary policy direction.

Based on Federal Funds futures contracts, there is a more than 50% chance of interest rate hikes in October and December, indicating the market's expectation of two further hikes in 2023. Consequently, the ringgit is expected to remain within a narrow range throughout the trading day. The currency also showed strength against other major currencies, including the euro, British pound, and Japanese yen, while showing gains against several ASEAN currencies such as the Singapore dollar, Thai baht, Indonesian rupiah, and Philippine peso.