KUALA LUMPUR – The ringgit opened higher against the US dollar after the US Federal Open Market Committee (FOMC) struck a dovish tone on inflation.
At 8 am, the ringgit advanced to 4.4200/4305 against the greenback from Wednesday’s close of 4.4330/4400.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the FOMC’s decision to keep rates unchanged and slow the pace of its balance sheet runoff from US$25 billion to US$5 billion signalled a dovish tilt by the US Federal Reserve (Fed).
“During the press conference, Fed Chair Jerome Powell indicated that tariff-driven inflation is likely to be transitory. He also acknowledged rising recession risks but said they were not at an alarming level.
“The accompanying quarterly projections showed the Fed Funds Rate remains on track for two quarter-point cuts this year, with additional reductions expected in 2026 and 2027,” he told Bernama.
Mohd Afzanizam said that against this backdrop, equities had rallied, while US Treasury yields had fallen.
“This should be positive for the ringgit, as the Fed has demonstrated its confidence that the US economy can withstand a high degree of uncertainty following erratic policy moves by US President Donald Trump’s administration.
“It also gives traders and investors time to reassess the current pessimism, as the Fed’s steady approach supports risk appetite,” he said, adding that the central bank was not rushing policy changes and remained committed to engineering a soft landing.
The ringgit traded mostly lower against a basket of major currencies.
It rose against the euro to 4.8231/8346 from 4.8324/8400 at Wednesday’s close but weakened against the British pound to 5.7504/7641 from 5.7496/7587 and fell against the Japanese yen to 2.9774/9847 from 2.9595/9643.
The local note was also higher against ASEAN currencies.
It edged up against the Singapore dollar to 3.3248/3330 from 3.3251/3306 at the previous close and strengthened against the Thai baht to 13.1622/2002 from 13.1778/2056.
The ringgit also advanced against the Indonesian rupiah to 267.3/268.1 from 268.1/268.7 and was slightly higher versus the Philippine peso at 7.71/7.74 from 7.74/7.75. – March 20, 2025