Ringgit closes higher ahead of BNM’s OPR decision

KUALA LUMPUR: The Malaysian ringgit experienced a slight increase against the US dollar and other ASEAN currencies at the close of trade on Wednesday, prior to Bank Negara Malaysia's (BNM) overnight policy rate (OPR) decision scheduled for the following day. The monetary policy committee (MPC) of BNM is set to hold its final policy meeting of 2026 on November 5.

At 6 PM, the local currency appreciated to 4.0610/4.0660 against the greenback from Tuesday's closing of 4.0735/4.0775. Market analysts anticipate BNM to hold the OPR steady at 2.75% for the remainder of 2027, buoyed by steady economic growth and a controllable inflation outlook. Headline inflation is projected to remain within BNM's anticipated range of 1.5% to 2.5% in the short term.

On the international front, Stephen Innes, managing partner at SPI Asset Management, noted the ringgit's strengthened position following the Democratic Party's victories in the US Mid-Term Elections. A Democratic majority in Congress might provide a slight boost to Asian currencies, such as the ringgit, as persistent political gridlock in Washington could reduce the possibility of additional fiscal expansion by the US Treasury, potentially exert downward pressure on US Treasury yields and the US dollar.

"Nevertheless, for the ringgit to achieve significant gains, markets need to begin pricing out the probability of a December US Federal Reserve (Fed) interest rate hike," Innes told Bernama. Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid also observed a positive shift in market sentiment following the US Mid-Term Election outcomes, as the incoming administration might face more legislative obstacles in enacting new laws, despite retaining veto powers.

Consequently, the US Dollar Index (DXY) fell 0.46% to 101.399 points. However, it remains premature to determine whether the election result will lead to substantial changes in US policies, particularly concerning trade and the ongoing situation in Iran. Presently, the market sentiment is favorable, which, to some extent, may have fostered a heightened risk appetite, contributing to the ringgit's gain of 0.20% to RM4.06 today.

Against major currencies, the ringgit traded at a slight premium. It was higher against the Japanese yen, trading between 2.5636/2.5669, compared to 2.5762/2.5789 at the previous close. The ringgit edged down against the euro, settling at 4.5723/4.5779 from 4.5587/4.5631, and slightly declined vis-à-vis the British pound, now at 5.4783/5.4850 from 5.4658/5.4712.

However, it strengthened against its ASEAN counterparts. The ringgit gained against the Singapore dollar, moving from 3.1807/3.1841 to 3.1771/3.1813, appreciated compared to the Thai baht, shifting from 12.0696/12.0858 to 12.0673/12.0868, rose against the Indonesian rupiah, changing from 224.3/224.6 to 223.5/223.8, and climbed against the Philippine peso, transitioning from 6.42/6.43 to 6.39/6.40.