Kuala lumpur: The ringgit is anticipated to maintain its trading range between 4.10 and 4.15 against the US dollar in the coming week, bolstered by Malaysia's stable macroeconomic conditions amidst evolving expectations regarding the United States' monetary policy.
According to BERNAMA News Agency, Kenanga Investment Bank Bhd noted that the probability of a December interest rate cut by the US Federal Reserve (Fed) has significantly diminished. Previously, market estimates placed the likelihood at over 90 percent; however, following the recent Federal Open Market Committee (FOMC) meeting, these odds have reduced to approximately 70 percent, now perceived as uncertain.
The uncertainty is attributed to the Fed's admission of operating with outdated inflation data, prompting increased caution among policymakers. Kenanga IB anticipates a December rate cut, with two additional cuts projected for 2026, as labor market weaknesses become more apparent, although the risk of stagflation makes a pause in Fed action a possibility.
Despite policy uncertainty, Kenanga IB highlights that the softness in US economic fundamentals may lead to a decline in the dollar, thereby supporting the ringgit's stability in the short term. Dr. Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, remarked that the ringgit's proximity to a four-year high reflects a positive sentiment among traders and investors toward Malaysia's economic outlook.
Dr. Mohd Afzanizam noted that the third-quarter 2025 gross domestic product (GDP) growth rate of 5.2 percent aligns with preliminary estimates, suggesting sustained monetary policy support for economic growth, with the Overnight Policy Rate (OPR) potentially holding at 2.75 percent in 2026. Additionally, ongoing fiscal consolidation is viewed as favorable, potentially attracting more foreign investment into government bonds.
On a weekly basis, the ringgit closed stronger against the US dollar at 4.1290/1345, compared to the previous week's 4.1735/1775. The local currency also improved against a range of major currencies, including the British pound, euro, and yen. Furthermore, the ringgit strengthened against its ASEAN counterparts, appreciating against the Singapore dollar, Indonesian rupiah, Philippine peso, and Thai baht.