Ringgit closes higher vs US dollar ahead of BNM OPR decision

KUALA LUMPUR, Nov 4 — The Malaysian ringgit saw a slight increase against the US dollar and other ASEAN currencies at today's close, ahead of Bank Negara Malaysia's (BNM) Overnight Policy Rate (OPR) decision scheduled for tomorrow. The Monetary Policy Committee (MPC) of BNM will hold its final policy meeting of 2026 on Nov 5. At 6pm, the local currency rose to 4.0610/0660 against the greenback, up from yesterday's close of 4.0735/0775.

Analysts anticipate BNM to keep the OPR at 2.75% for the rest of 2027, supported by steady economic growth and a manageable inflation outlook. Headline inflation is projected to stay within BNM's range of 1.5 to 2.5% in the near term. On the external front, SPI Asset Management's managing partner, Stephen Innes, noted that the ringgit was in a better position due to the Democratic Party's success in the US Mid-Term Elections.

He suggested that a Democratic victory in the US Congress could provide a small boost to Asian currencies, including the ringgit, as political gridlock in Washington might reduce the chances of additional US fiscal expansion, thus weighing on US Treasury yields and the US dollar. However, for the ringgit to experience more significant gains, markets would need to stop considering the possibility of a December US Federal Reserve (Fed) interest rate hike.

The complication lies in the fact that President Donald Trump's tariffs largely remain under his control, so the election outcome does not necessarily eliminate the inflation pressures that could prevent the Fed from moving towards a more dovish stance, thereby limiting how much the US dollar could decline initially. Bank Muamalat Malaysia Bhd's chief economist, Dr Mohd Afzanizam Abdul Rashid, also mentioned that market sentiment had improved following the US Mid-Term Elections result, as the Trump administration might face greater legislative obstacles when passing new laws.

Although Trump retains veto powers, the US Dollar Index (DXY) fell 0.46% to 101.399 points. However, it remains too early to determine if the election result will bring a substantial shift in US policies, particularly concerning trade and the ongoing war in Iran. Currently, markets are quite optimistic, which may have contributed to improved risk appetite, leading to today's 0.20% gain in the ringgit's value to RM4.06.

Comparatively, the ringgit was higher against the Japanese yen (2.5636/5669), remained stable against the euro (4.5723/5779), and experienced a slight decline against the British pound (5.4783/4850). However, it strengthened against ASEAN currencies, gaining against the Singapore dollar (3.1771/1813) and against the Thai baht (12.0673/0868), inching up against the rupiah (223.5/223.8) and climbing against the Philippine peso (6.39/6.40).