Ringgit Opens Higher Against US Dollar as US Pauses Tariffs
Positive Sentiment Boosts Malaysian Currency
The ringgit opened higher against the US dollar as the United States (US) has paused import tariff hike on Canada and Mexico, coupled with softer US economic data, said an analyst.
Tariff Pause and Softer Economic Data Contribute to Ringgit’s Strength
At 8 am today, the ringgit strengthened to 4.4500/4700 against the greenback compared to Monday’s close of 4.4710/4800.
US President’s Strategy to Leverage Tariffs for Better Deal
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US has agreed to pause a 25% import tariff on goods from Canada and Mexico for a month as President Donald Trump was able to bring leaders from the two countries to the negotiating table.
The Tariff Pause: A Tool for Negotiation
“The way we see it, Trump is leveraging tariffs as a tool to negotiate for a better deal,” said Dr Mohd Afzanizam. “While this can wreak havoc on market sentiments, the US economy is in good shape and it does not make sense if the seating president would want to reverse such a positive trend.”
US Dollar Index Declines as Trade War Tensions Ease
Mohd Afzanizam also noted that the US Dollar Index (DXY) was seen declining from a high of 109.878 points to 108.404 points last night as the trade war was momentarily averted.
Business Sentiment in US Manufacturing Sector Improves
However, he noted that data from the latest survey showed that business sentiment in the US manufacturing sector improved in January 2025.
Ringgit Expected to Strengthen Further
“The market is expected to remain focused on tariff developments, with China being the next key concern regarding potential concessions. Hence, we expect the ringgit to strengthen today,” said Dr Mohd Afzanizam.
Ringgit Trades Mixed Against Major Currencies
The local note edged higher against the Japanese yen to 2.8660/8792 from Monday’s 2.8838/8898. However, it depreciated vis-a-vis the euro to 4.5969/6175 from 4.5747/5839 yesterday, and fell against the British pound to 5.5340/5589 from 5.4966/5077 previously.
Ringgit Slips Against ASEAN Currencies
The local note also traded mostly lower against ASEAN currencies. It rose against the Philippine peso to 7.58/7.62 from 7.62/7.64 on Monday, slid versus the Singapore dollar to 3.2725/2877 from 3.2709/2777, was lower vis-a-vis the Thai baht at 13.1424/2131 from 13.1345/1687, and slipped against the Indonesian rupiah at 270.5/271.9 compared to 271.1/272.5 previously.
Conclusion
In conclusion, the ringgit’s strength is attributed to the US’ decision to pause import tariffs on Canada and Mexico, as well as softer US economic data. The market is expected to remain focused on tariff developments, with China being the next key concern. The ringgit is expected to strengthen further as a result.
FAQs
* What is the current exchange rate of the ringgit against the US dollar?
The ringgit is currently trading at 4.4500/4700 against the greenback.
* What is the reason for the ringgit’s strength against the US dollar?
The ringgit’s strength is attributed to the US’ decision to pause import tariffs on Canada and Mexico, as well as softer US economic data.
* What is the expected direction of the ringgit’s exchange rate?
The ringgit is expected to strengthen further as a result of the US’ decision to pause import tariffs and softer US economic data.