Ringgit gains against regional peers despite US rate hike concerns

The ringgit traded higher against a basket of regional currencies, reflecting relative strength in Malaysian assets compared to peers in the Association of Southeast Asian Nations. However, the local unit depreciated to 4.0765/4.0805 against the US dollar, weighed down by market expectations of an aggressive monetary tightening cycle from the US central bank.

Analysts attributed the mixed performance to divergent market dynamics between the dollar and regional currencies. While the ringgit improved its position against ASEAN counterparts, the stronger greenback continued to exert downward pressure on emerging market currencies throughout the region.

Market participants remained focused on signals from the Federal Reserve regarding future policy moves. Expectations of sustained or elevated US interest rates typically support the dollar, as higher yields attract international capital flows toward dollar-denominated assets. This dynamic has created headwinds for regional currencies including the ringgit.

Traders will continue monitoring US economic data and central bank communications for clues about the pace and extent of future rate adjustments. Any hints of a more hawkish stance could further support the dollar against regional units in coming sessions.