KUALA LUMPUR, April 3, 2025 – The Malaysian ringgit closed higher at RM4.44 against the US dollar today, despite initial volatility following US President Donald Trump’s announcement of a global reciprocal tariff regime.
Market Performance and Reactions
Bank Muamalat Malaysia Bhd’s chief economist, Afzanizam Rashid, noted that the ringgit weakened in the morning session, trading at RM4.4822, before recovering in the afternoon. He attributed the fluctuation to investor concerns over the potential economic impact of the new US tariff policy.
“In response to the tariff announcement, Malaysia’s Ministry of Investment, Trade, and Industry expressed its willingness to engage in discussions with the US, emphasizing a pragmatic and diplomatic approach,” Afzanizam said.
He cautioned that market sentiment remains fragile, with fears of broader retaliatory measures that could impact global trade and demand. Given these uncertainties, the ringgit is expected to trade between RM4.44 and RM4.45 in the near term.
Global Trade Concerns and the Federal Reserve’s Role
Stephen Innes, Managing Director of SPI Asset Management, highlighted that while the ringgit faces near-term challenges, attention is shifting to how the US economy reacts to the new tariff policy.
“Foreign exchange markets are adjusting their focus, with growing speculation that this tariff shock could prompt the US Federal Reserve to cut interest rates sooner than expected,” Innes explained.
He suggested that if the Fed adopts a more accommodative stance, it could eventually support the ringgit despite its current struggles.
The Impact of Trump’s Tariff Regime
On April 2, President Trump signed an executive order from the White House Rose Garden, marking what he called “America’s Liberation Day.” Under the new tariff system, the US will impose a 10% baseline tariff on all imports, with additional surcharges based on reciprocal measures from trade partners.
Malaysia is among the affected nations, facing a 24% tariff on its exports to the US. The move is expected to have significant implications for trade, as Malaysia currently ranks 15th among US trade partners, with a trade surplus of US$24.8 billion in 2024.
Ringgit’s Performance Against Other Currencies
At 6 PM, the ringgit was trading at 4.4400/4.4460 against the greenback, slightly stronger than yesterday’s close of 4.4510/4.4565.
Against major currencies:
Weakened against the Japanese yen (3.0289/3.0332 vs. 2.9783/2.9821 yesterday)
Declined against the euro (4.8969/4.9035 vs. 4.8098/4.8157)
Fell against the British pound (5.8470/5.8549 vs. 5.7632/5.7703)
Against ASEAN currencies:
Strengthened against the Thai baht (12.9529/12.9769 vs. 13.0260/13.0490)
Gained against the Indonesian rupiah (265.1/265.6 vs. 266.3/266.7)
Rose against the Philippine peso (7.77/7.79 vs. 7.78/7.79)
Declined against the Singapore dollar (3.3229/3.3276 vs. 3.3150/3.3193)