Ringgit Edges Higher Before BNM Rate Decision

Bank Muamalat chief economist Mohd Afzanizam Abdul Rashid said the MPC is “very likely” to keep rates steady, a view that would reinforce a wait-and-see stance after a period in which the ringgit has been pulled between domestic policy expectations and a firmer US dollar. The dollar index eased 0.12% to 99.555 ahead of Friday’s US non-farm payrolls release, while market attention has also centered on Federal Reserve commentary from Jackson Hole that revived talk of a possible rate increase at the September FOMC meeting.

For Malaysia, a hold would preserve policy flexibility rather than chase growth with easier money, at a moment when the currency is still vulnerable to swings in US yields and broader risk sentiment. For investors, that means the ringgit’s near-term direction is likely to be determined less by the decision itself than by whether BNM sounds confident enough to anchor expectations or cautious enough to leave the currency exposed to another leg of dollar buying.

The ringgit’s movement was mixed against other majors and regional currencies, rising against sterling and the euro but weakening against the yen, Singapore dollar and Thai baht. That pattern points to a market that is not trading a single domestic catalyst so much as adjusting to a broader FX backdrop in which the dollar remains the key external driver.

The dollar’s latest tone matters for local assets as well. US Dollar-related exchange-traded activity has held above its 50-day moving average, even as momentum indicators have eased from more overbought readings, suggesting the greenback is still supported but not in a straight-line uptrend. FX volatility gauges, however, show elevated caution, which helps explain why the ringgit is likely to remain in a narrow but reactive range until BNM and the next US payrolls print give traders a firmer narrative.

If BNM stays on hold and avoids a hawkish surprise, the ringgit could find modest support from reduced policy uncertainty. But any upside is likely to be capped unless the dollar softens more decisively or US rate-cut expectations return, leaving Malaysia’s currency trade dependent on external yields as much as domestic fundamentals.