Kuala lumpur: The ringgit extended earlier gains to end higher against the US dollar on Wednesday driven by renewed optimism among market traders following signs of possible de-escalation in the United States-Iran war. At 6 pm, the local currency rose to 4.0240/0295 against the greenback from Tuesday's close of 4.0475/0520.

According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid stated that market traders are observing signs of a possible de-escalation in the US-Iran war, as indicated by US President Donald Trump suggesting a withdrawal from the area within a few weeks. This has reportedly led to some optimism among traders, resulting in the acquisition of the ringgit.

At the same time, Dr. Mohd Afzanizam highlighted that the US dollar index fell by 0.35 percent to 99.613 points, reflecting optimism about potential de-escalation between the US and Iran. Meanwhile, there are indications of a softening US labor market, with reports showing a decline in job openings from 7.24 million in January to 6.88 million in February.

Dr. Mohd Afzanizam mentioned that markets are likely to continue observing incoming data, particularly the Non-farm payrolls for March. There is speculation that potential monetary easing by the Federal Reserve could gain momentum, shifting focus toward promoting growth and supporting labor markets. This could act as a catalyst for the weakening of the US dollar index in the near term, although the situation remains fluid and largely dependent on developments in the US-Iran war.

At the close, the ringgit was traded lower against a basket of major currencies. It weakened against the British pound, Japanese yen, and the euro. However, it showed mixed performance against ASEAN currencies, strengthening against the Indonesian rupiah and Thai baht, while easing against the Singapore dollar and the Philippines peso.