Ringgit Gains on Election Optimism Amid FOMC Anxiety

The Malaysian ringgit has strengthened against the US dollar as optimism surrounding the upcoming Negeri Sembilan state election is met with caution ahead of the Federal Open Market Committee (FOMC) meeting.

Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, said market participants will be watching whether the election influences national politics. He noted that positive domestic developments could support the ringgit, but external factors continue to dominate market sentiment.

Ahead of the FOMC meeting on July 28-29, Afzanizam expects a rate hike, which would support the US dollar and put upward pressure on inflation. This, in turn, could influence the Federal Funds Rate.

The ringgit traded mostly higher against major currencies at the opening, but weakened against the British pound to 5.4516/4650 from 5.4442/4509 previously. It strengthened against the Japanese yen to 2.4956/5018 from 2.4976/5008 and appreciated against the euro to 4.6530/6644 from 4.6556/6613.