Ringgit at 4.0806 per Dollar, Supported by Export Growth and Lower US Rate-Hike Expectations
Key Facts
The reference rate for the dollar against the ringgit was 4.0806 on October 21, compared with 4.0824 the previous day, indicating a slight rise in the Malaysian currency, according to Bank Negara Malaysia data. This coincided with a decline in the dollar index at the opening of the Malaysian market, amid lower expectations of a US rate hike at the October meeting, Bernama reported. Central bank data showed the dollar traded between 4.0791 and 4.0815 ringgit. These indicators offer a picture of limited currency movement, as US policy expectations intersected with domestic factors including trade and growth. Malaysian economic data, alongside the dollar’s trajectory, also featured in assessments of the ringgit’s direction.
Bank Muamalat chief economist Dr. Mohd Afzanizam Abdul Rashid attributed support for the ringgit to export and gross domestic product growth, as well as expectations of domestic interest-rate normalization, Bernama reported. Trading showed a mixed performance for the Malaysian currency against its ASEAN peers, reflecting divergent regional movements during the session. Foreign trade is one indicator supporting this domestic factor: the Malaysia External Trade Development Corporation said total trade in the first nine months of the year rose 30.1% year on year to 2.910 trillion ringgit. Exports increased 34.0% to 1.571 trillion ringgit over the same period. These figures put exports at the forefront of the trade activity indicators Afzanizam cited as supporting the currency.
In an advance estimate, Malaysia’s economy grew 5.3% year on year in the third quarter, after growth of 6.0% in the second quarter, according to the Department of Statistics Malaysia. But quarter-on-quarter growth accelerated to 4.6% from 1.9% in the previous quarter, presenting a different picture from the annual comparison. Performance across sectors showed a clear divergence in activity. Manufacturing grew 7.5% and services 5.4% year on year in the third quarter, while mining and quarrying contracted 4.9%. These results provide domestic context for the ringgit’s movements, while the currency’s performance remains linked to US interest-rate expectations as well.
On the US side, New York Federal Reserve President John Williams said in a Bloomberg interview on October 13 that he currently sees no reason to raise interest rates again in 2027 after another increase that may be appropriate this year. Williams linked inflation’s approach to 2% to his expectation that the effects of tariffs and the energy shock would fade. The interview came ahead of the October meeting, while Bernama reported lower expectations of a rate hike at that meeting as part of the context for the dollar’s movement at the Malaysian market opening. The Federal Reserve’s published calendar does not establish an expectation for the rate decision or its level. What can be anticipated, therefore, centers on the meeting date and release of the decision, alongside economic data scheduled for later.
The Federal Reserve will hold its meeting on October 27 and 28, with the decision and press conference scheduled for October 28, according to the central bank’s calendar. The next day, the US Bureau of Economic Analysis will release its advance estimate of third-quarter gross domestic product at 8:30 a.m. US local time. The sequence gives traders two nearby events to monitor US monetary policy and economic data. These dates follow Malaysian data showing slower annual growth in the third quarter than in the previous quarter, alongside faster quarterly growth. Based on the available information, the ringgit’s drivers remain a mix of dollar developments and domestic factors related to growth, trade and Malaysian interest-rate expectations.