KUALA LUMPUR, July 18 — Continuous foreign net inflows into the Malaysian equities market, along with the United States Federal Reserve (US Fed) interest rate cut optimism, are among the reasons that propped up the ringgit to touch a fresh six-month high against the greenback today.
The ringgit traded at 4.6590 against the US dollar at 8.44am today, reaching the highest level since 6pm on January 12, 2024, when it hit 4.6455, thanks to rising optimism among foreign investors towards the equities market.
At 6pm today, the ringgit closed at 4.6680.
Foreign investors remained net buyers on Bursa Malaysia for the second consecutive week, with net purchases totalling RM478.2 million last week.
Bursa Malaysia ended at a fresh three-year high yesterday after the FTSE Bursa Malaysia KLCI settled at 1,633.54.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid told Bernama that major foreign firms' rating upgrades of Malaysia also positively impacted the ringgit.
Fitch Ratings has maintained Malaysia’s sovereign credit rating at BBB+ with a “stable” outlook, underpinned by a diversified economy and export base.
JP Morgan has also upgraded Malaysia’s rating from “underweight” to “neutral” after almost six years, crediting the country’s policy reforms, data centre investments and infrastructure build-up.
He said the government’s commitment to fiscal discipline to reduce budget deficits has gained momentum with the recent fuel subsidy rationalisation and, soon, the implementation of e-invoicing, which could increase transparency and tax compliance.
Additionally, optimism about the US interest rate cut continued to propel emerging currencies, including the local note.
The media reported that the US Federal Reserve's governor Christopher Waller has indicated that the time for a rate cut is approaching.
The Federal Funds Rate (FFR) is now 5.25 per cent to 5.5 per cent, while Malaysia’s overnight policy rate in Malaysia is at 3.0 per cent.
“This has been the primary mover for emerging market currencies as the cut in FFR would narrow the interest rate gap between the US and the rest of the region, including Malaysia,” Afzanizam said.
— Bernama
