Ringgit gains against major currencies while retreating against US dollar

KUALA LUMPUR, Sept 23 — The ringgit closed on a divergent note today, recording gains against several major currencies while experiencing a slight depreciation against the US dollar amid mounting speculation regarding global monetary policy.

According to the original publisher, the local note’s retreat against the greenback was largely driven by market sentiment surrounding expectations of further interest rate hikes by the United States Federal Reserve. While the ringgit managed to strengthen against a basket of other major currencies, the persistent strength of the US dollar continues to act as a significant headwind in the foreign exchange market.

The mechanics of this movement reflect a broader trend where US macroeconomic signals dictate short-term volatility for emerging market currencies. As investors recalibrate their portfolios in anticipation of a higher-for-longer interest rate environment in the US, the ringgit has found itself caught in the crosscurrents of global central bank policy shifts.

Market participants remain closely tethered to these interest rate narratives, as any divergence between US and Malaysian monetary policy directly impacts capital flows. While the ringgit’s performance against other major currencies suggests resilience in the domestic economy, the pressure from the US dollar highlights the currency's sensitivity to global liquidity conditions.

For the average Malaysian consumer, a weakening ringgit against the US dollar often translates into higher costs for imported goods. Given that many consumer products, technology components, and raw materials are denominated in US dollars, prolonged weakness could eventually place upward pressure on the cost of living. This is particularly relevant for Malaysian SMEs that rely on imported inventory, as their operational costs may increase, potentially squeezing profit margins.

For workers and investors, the currency fluctuation creates a complex landscape. While a stronger ringgit against other major currencies might benefit Malaysians travelling abroad or purchasing goods from non-US markets, the US dollar’s dominance remains the primary factor for domestic inflation. Investors in the local equity market may also see volatility as foreign institutional funds react to the currency’s shifting valuation against the greenback.

This performance occurs against a backdrop of a relatively stable domestic economic environment. Malaysia continues to show solid underlying growth, underscored by a recent real GDP growth of 6.0 per cent year-on-year. Furthermore, the labour market remains resilient with an unemployment rate of 3.0 per cent, representing 520,300 unemployed individuals, while headline inflation remains controlled at 1.9 per cent year-on-year as of August 2026.

These economic indicators provide a cushion for the local economy, suggesting that the ringgit’s movement is currently more reflective of external global interest rate factors rather than internal instability. However, observers should monitor how these currency shifts interact with the broader cost of fuel, where prices such as RON95 under the BUDI95 scheme at RM1.99 and diesel at RM5.27, continue to play a critical role in household and logistics spending.

What remains unconfirmed is the extent to which the Federal Reserve will implement further rate hikes in the coming months, or how quickly the market will price in these changes. Whether the ringgit can regain its footing against the US dollar in the near term remains a matter of ongoing speculation among financial analysts.