Budget 2027 optimism lifts ringgit despite external headwinds

KUALA LUMPUR: The Malaysian ringgit experienced a slight improvement against the US dollar at the opening of the trading day, driven by optimism surrounding the Budget 2027. At 8 a.m., the ringgit was trading between 4.0815 and 4.0900, up from Monday's close of 4.0820 to 4.0865. However, Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid cautioned that rising geopolitical risks in the Middle East and expectations of higher US inflation may bolster the US dollar.

He pointed to the ongoing situation in Riyadh, Saudi Arabia, following missile attacks, which could escalate into a broader conflict, potentially disrupting oil supplies. Brent crude oil prices have already risen by 1.38% to US$106.16 per barrel, resulting in a 0.35% increase in the US Dollar Index (DXY) to 102.573 points. The US Consumer Price Index (CPI) inflation rate is projected to rise to 3.6% in September, up from 3.4% in August, according to market consensus.

Afzanizam noted that the ringgit is likely to remain within a narrow trading range. At the opening, the local currency traded stronger against a range of major and Asean currencies, experiencing a minor dip against the Japanese yen, a rise against the British pound, and a strengthening against the euro. Against its Asean counterparts, the ringgit rose slightly against the Indonesian rupiah and remained relatively stable against the Philippine peso and Singapore dollar, while strengthening against the Thai baht.