Ringgit rises against US dollar ahead of Q3 GDP estimates

KUALA LUMPUR: The Malaysian ringgit strengthened against the US dollar as investors awaited Malaysia's third-quarter GDP figures, expected on Friday. The currency reached 4.0800-4.0835 per dollar compared to yesterday's close of 4.0805-4.0850. Afzanizam Rashid, chief economist at Bank Muamalat Malaysia Bhd, forecasted Malaysia's GDP for Q3 2026 at approximately 5.2%.

Although slightly lower than the previous quarter's 6%, the economy remains resilient due to sustained domestic demand and investments. He added that the ongoing economic growth above trends supports the possibility of a further normalization of the overnight policy rate towards 3%. Meanwhile, the US Dollar Index surprisingly dropped, despite US inflation being higher than anticipated, with September's Consumer Price Index rising to 3.7% from 3.4%.

The 10-year US Treasury yield decreased by 10 basis points to 5.09%, indicating increased demand for safe-haven assets after a decline in technology stocks, particularly those related to artificial intelligence. Concerns over high valuations and rising financing costs in the AI sector led investors to reassess US growth prospects.

Additionally, cautious remarks from Federal Reserve officials dampened expectations of an imminent interest rate increase, even with elevated inflation, contributing to the US dollar's weakness. The ringgit traded at a lower level against other major currencies, weakening against the Japanese yen, euro, and British pound, while strengthening against the Indonesian rupiah, Philippine peso, Singapore dollar, and Thai baht.