KUALA LUMPUR: The ringgit ended the trading week on a weaker note against the US dollar on Friday, pressured by uncertainties surrounding the ongoing trade war, which affected market sentiment, analysts said.
SPI Asset Management’s Managing Partner, Stephen Innes, noted that the market is preparing for the impact of these uncertainties, as the ringgit continues to show signs of weakness, with concerns over tariffs influencing forex market trends.
At 6 PM, the ringgit weakened to 4.4410/4455 against the US dollar, compared to 4.4310/4375 on Thursday.
US Inflation and Federal Reserve’s Monetary Policy
Innes also highlighted that inflation in the US remains a challenge, with both the Producer Price Index (PPI) and Consumer Price Index (CPI) coming in weaker than expected, indicating persistent inflationary pressures.
“Core inflation measures, such as the CPI excluding airline fares and PPI components affecting Personal Consumption Expenditure (PCE), suggest that inflation is not slowing as fast as the market anticipates.
“Since PCE remains strong, the US Federal Reserve (Fed) is more likely to maintain a hawkish stance—favoring rate hikes rather than cuts,” he told Bernama.
As a result, weaker PPI and CPI figures are not enough to prompt the Fed to ease its monetary policy, further strengthening support for the US dollar, he added.
Ringgit’s Performance Against Other Currencies
Meanwhile, Bank Muamalat Malaysia Bhd’s Chief Economist, Dr. Mohd Afzanizam Abdul Rashid, said the ringgit’s depreciation against the US dollar aligns with the rising US Dollar Index (DXY).
He pointed out that concerns over the trade war and a potential US recession have led to an increased risk-off sentiment among investors.
“The disinflation trend in the US suggests the Fed may be more inclined to accelerate monetary policy easing,” he added.
Despite its decline against the US dollar, the ringgit strengthened against other major currencies:
Euro: Improved to 4.8194/8243 from 4.8205/8276
British Pound: Rose to 5.7404/7463 from 5.7426/7510
Japanese Yen: Gained to 2.9809/9842 from 2.9909/9953
However, against ASEAN currencies, the ringgit mostly traded lower:
Thai Baht: Rose to 13.1820/2020 from 13.1199/1443
Singapore Dollar: Weakened to 3.3241/3277 from 3.3198/3250
Indonesian Rupiah: Dropped to 271.6/272.0 from 269.7/270
Philippine Peso: Slight decline to 7.75/7.77 from 7.72/7.74
— BERNAMA
