Ringgit opens higher vs US dollar on fiscal discipline pledge

KUALA LUMPUR: On Monday, the Malaysian ringgit opened higher against the US dollar, buoyed by the government's pledge to maintain fiscal discipline unveiled in Budget 2027. At 8am, the ringgit climbed to 4.0820/4.0880 against the US dollar, up from 4.0830/4.0875 previously. Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid noted that the government's target to reduce the fiscal deficit to 3.3% of GDP in 2027 from 3.6% this year, demonstrated a pragmatic approach that should bolster Malaysia's sovereign credit rating, providing a strong foundation for the ringgit.

However, Rashid cautioned that external factors, especially developments in the Middle East and their potential impact on global crude oil prices, remained uncertain. Hence, he highlighted the importance of monitoring the US Federal Reserve's potential interest rate hikes this month, as this could influence the ringgit-US dollar exchange rate.

He forecasted that the ringgit-US dollar pair would remain within a tight range throughout the day. The ringgit had shown resilience against various currencies, strengthening against the British pound, euro, Singapore dollar, Thai baht, and Indonesian rupiah. However, it experienced a slight dip against the Japanese yen. In contrast, against the Philippine peso, the ringgit remained steady.