Kuala lumpur: The Malaysian ringgit has the potential to climb further to the 3.78 level against the US dollar following the US Supreme Court's decision to strike down President Donald Trump's tariff policy, with the move seen benefiting emerging markets like Malaysia.

According to BERNAMA News Agency, this is based on the view that the new tariff schedule of 15 per cent, which Trump announced soon after the court struck down his earlier International Emergency Economic Powers Act (IEEPA)-based tariffs last Friday, benefits emerging markets over developed markets. A report by CIMB Treasury and Markets Research suggests that the exporter gap between the Group of 10 (G10) industrialised countries and Asian economies would narrow.

This development is significant for Malaysia as the ringgit, which today opened at an eight-year high of 3.8885 versus the US dollar, is poised for further gains. Economists indicate this would provide further economic stability for the nation.

CIMB Treasury and Markets Research reiterates that the new US tariff schedule benefits emerging over developed markets, narrowing the relative G10 outperformance against Asian exporters, currently at 62 basis points (bps). However, spreads in the emerging market twin-deficit basket may remain wide at 413 bps.

Policymakers might also allow further gains on the US dollar to counter US claims of current account imbalances. This convergence could extend gains for the ringgit with a targeted level of 3.78, with revised forecasts adding a one to two per cent upside.

The research note further mentions that the renewed uncertainty over tariff rates supports Bank Negara Malaysia's stance in maintaining last year's pre-emptive overnight policy rate (OPR) cut to 2.75 per cent. Although any potential boost to export growth from lower effective tariff rates is marginal at this stage, the tail risk from higher Section 232 tariffs on products such as semiconductors is a potential concern.