- Malaysia Ringgit (MYR) rises for a third day
- Bank Negara Malaysia left rates at 3%
- US Dollar (USD) rises against major peers
- Trump threatens 10% tariffs on China
The US dollar-Malaysian ringgit (USD/MYR) exchange rate is falling for a third straight day. The pair fell 0.38% in the previous session, settling on Tuesday at 4.4730. At 21:00 UTC, USD/MYR trades -0.84% at 4.4435 and is in a range of 4.4345 to 4.4685.
The Malaysian ringgit extended gains on Wednesday after the central bank left interest rates unchanged as expected.
The Bank Negara Malaysia kept its benchmark interest rate on hold at 3% and said that inflation is expected to remain manageable heading into 2025 as global cost conditions ease and amid a lack of excessive domestic demand pressures.
Expectations that the central bank will leave rates at the 3% level across the year support the Ringgit.
Malaysia is not under any immediate pressure to reduce borrowing costs, even as central banks worldwide move to ease monetary policy.
Resilient consumer spending and a growing investment pipeline are expected to help cushion the economy from external volatility.
The currency was the best performer across emerging markets last year, with the central bank encouraging firms to repatriate overseas income. The outlook for this year remains strong.
The US Dollar is falling against the Ringgit but rising against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at 108.24 at the time of writing, up 0.17% after losses yesterday.
The US dollar is edging higher as the market assesses the possibility of US tariffs on China. The US dollar index recovered from a three-week low after President Trump said he is considering a 10% tariff on all Chinese goods in retaliation to the flow of fentanyl from the country.
The 10% threat is significantly less than the 60% that Trump had initially promised during the election campaign. However, markets are still jittery that trade tariffs could increase inflationary pressures within the US economy.
The Federal Reserve is expected to leave interest rates on hold next week. The market is pricing in just a 1% chance of a 25 basis point rate cut in the January 28th—29th FOMC meeting.
