Ringgit Seen Trading in Tight Range as Geopolitical Risks and Election Watch Weigh on Market Sentiment

KUALA LUMPUR: The Malaysian ringgit is expected to trade within a narrow range of RM4.02 to RM4.04 against the US dollar this week, as investors remain cautious amid ongoing geopolitical tensions and domestic political developments.

According to Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid, uncertainty surrounding the stalled negotiations between the United States and Iran continues to cloud global market sentiment.

He said the impasse could keep global fuel prices elevated, potentially adding to inflationary pressures worldwide.

“Higher energy prices may revive expectations of further interest rate increases globally, which could encourage more cautious trading activity in currency markets,” he said.

Apart from external factors, Mohd Afzanizam noted that domestic political developments are also being closely monitored by investors, particularly the upcoming state elections in Johor and Negeri Sembilan.

The ringgit came under pressure last week, ending lower against the US dollar. On a Friday-to-Friday basis, the local currency closed at 4.0280/0320 against the greenback, compared with 3.9625/9670 a week earlier.

The Malaysian currency also weakened against a basket of major global currencies during the week.

Against the British pound, the ringgit fell to 5.4233/4287 from 5.3165/3225, while it declined against the euro to 4.6882/6928 from 4.6127/6180 previously. It also eased against the Japanese yen to 2.5183/5209 from 2.4874/4904.

Meanwhile, the ringgit traded lower against regional ASEAN currencies. It slipped against the Singapore dollar to 3.1390/1424 from 3.1010/1048, weakened against the Thai baht to 12.3433/3605 from 12.1732/1926, and declined against the Philippine peso to 6.55/6.56 from 6.43/6.44.

The local currency also depreciated against the Indonesian rupiah, trading at 223.3/223.6 compared with 221.6/221.9 a week earlier.

Market analysts expect investors to remain vigilant this week as they assess geopolitical developments, inflation risks and domestic political events that could influence currency movements in the near term.