Ringgit Rises on Decreased Expectations of US Rate Hike

The Malaysian ringgit extended its gains against the US dollar as expectations of a US Federal Reserve interest rate hike in September decreased, weighing on the greenback. Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid attributed the appreciation of the ringgit to lower odds of a rate hike at the upcoming Federal Open Market Committee meeting and positive sentiment towards the Malaysian economy.

The Finance Minister II Amir Hamzah Azizan said that Malaysia's impressive economic growth in the first half of 2026, which exceeded Bank Negara Malaysia's GDP projection of 4% to 5%, demonstrated the resilience of the country's economy. The GDP grew 5.4% in the first quarter and 6% in the second quarter, resulting in overall economic growth of 5.7% in the first half of 2026.

Afzanizam noted that market sentiment remained fragile due to higher crude oil prices, which could push inflation higher towards the end of the year. If this happens, the rate hike thesis could resurface again.