KUALA LUMPUR: The ringgit continued to be on a stronger footing against the US dollar today after recent weakness as the markets anticipate a rate cut by the US Federal Reserve, said an economist. At 6 pm, the local note improved to 4.3415/3505 against the greenback from Monday’s close of 4.3715/3765.

According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid noted that Bank Negara Malaysia (BNM) is expected to keep the Overnight Policy Rate (OPR) unchanged, which is providing further support for the ringgit. “Ultimately, the gap between the two rates will make the ringgit look more appealing at the current juncture,” he stated.

Markets are currently pricing in a 25-basis point interest rate cut at the Fed’s November meeting, which is scheduled for November 6-7. Coinciding with this, BNM’s Monetary Policy Committee (MPC) meeting is set to take place almost simultaneously on November 5-6.

Meanwhile, SPI Asset Management managing director Stephen Innes commen
ted that the markets appear to be preparing for a political gridlock, leading investors to ease off the Donald Trump trade. This sentiment is particularly evident in the overbought USD/MYR pair, which has seen some notable trimming as traders hedge their bets. Innes pointed out that a gridlocked Congress would considerably limit sweeping policy changes, especially in the foreign exchange realm, possibly explaining today’s rally in the ringgit.

Despite the ringgit’s positive performance, Innes cautioned that the broader context should not be overlooked. He emphasized that while the rally is noteworthy, it remains a cautious move, with the ringgit’s direction likely to be influenced by the outcome of the US election. He suggested that the following day could prove pivotal for the ringgit’s trajectory.

At the close of trading, the ringgit also showed strength against a basket of major currencies. It rose against the British pound, appreciated versus the Japanese yen, and gained ground against the euro. The loc
al note also traded higher against ASEAN currencies, including the Indonesian rupiah, Singapore dollar, Thai baht, and Philippine peso.