Ringgit Fluctuates Amid Geopolitical Tensions and Safe-Haven Demand

The Malaysian ringgit started the trading week on a mixed note, reflecting both its underlying strength and vulnerability to global events. The currency traded at 4.0725 to 4.0780 against the US dollar on Monday morning, slightly softer than Friday's closing levels of 4.0715 to 4.0765.

According to Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, geopolitical risk is a key factor in shaping current market sentiment. The diplomatic impasse over the Strait of Hormuz, which carries roughly one-fifth of all globally traded oil, has created uncertainty and driven investors towards safe-haven assets like the US dollar.

The ringgit firmed against the euro, climbing to 4.6333 to 4.6395 from Friday's range of 4.6378 to 4.6435, and advanced against the British pound to 5.3867 to 5.3940, compared with 5.3907 to 5.3973 previously.

However, the ringgit eased against the Japanese yen, which has become more appealing due to the Bank of Japan's shift towards higher interest rates. Within the ASEAN region, the ringgit held its ground and gained ground in several cases, edging higher against the Singapore dollar and posting a noticeable improvement against the Thai baht.