To be anchored near 4.20/USD as domestic strength offsets external risks
The ringgit surged to its highest level since March 2022, becoming the world’s top-performing currency this week. This follows the Fed’s oversized 50 bps rate cut on Sep 18, surpassing the expected 25 bps. The ringgit rally occurred despite the USD index remaining fairly anchored around the 100.6 mark and the 10-year MGS-UST yield differential turning negative again due to a rebound in longterm UST yields. Additionally, domestic factors, including robust trade growth, government initiatives to boost FDI, and expectations that BNM will keep the OPR at 3.00% for at least the next 12 months during the global rate-cutting cycle, have supported the ringgit strong uptrend.
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