Ringgit Firmer vs Peers as Oil Rises

The market move reflects a familiar split in ringgit trading: the currency is being buffeted by global dollar demand while still drawing support from regional relative strength. Bank Muamalat Malaysia chief economist Afzanizam Rashid said the jump in Brent crude to about $104.64 a barrel, driven by escalating tensions involving the US, Israel and Iran, had weighed on sentiment. Higher oil prices tend to reinforce expectations of tighter global financial conditions and can lift the dollar through safe-haven flows, even as they improve the terms of trade for energy exporters.

The bigger near-term driver, however, is the Fed. Traders are positioning ahead of the central bank’s interest-rate decision and updated projections for growth, inflation, unemployment and the federal funds rate. If policymakers keep the door open to another hike or push back against early easing expectations, that would support the dollar and keep higher-yielding US assets attractive relative to emerging-market currencies such as the ringgit.

For Malaysia, the implications run in both directions. A firmer oil market can help government revenue and the external balance, but it also raises imported inflation risks and complicates the policy mix if the Fed stays restrictive for longer. For investors, the key question is whether the ringgit can continue to outperform regional peers even if it remains vulnerable against the dollar.

Technically, the ringgit’s latest level is still near its 50-day moving average and above its 200-day moving average, suggesting the currency has not broken its broader stabilizing trend even after recent swings. That leaves the next Fed signal and crude price direction as the main catalysts for the currency’s next move.