Ringgit Soars as Rate Hike Expectations Wane

The ringgit extended its gains against major and regional currencies on August 18, as expectations of a United States Federal Reserve interest rate hike in September declined. The currency rose to 4.0575/0615 against the US dollar from yesterday's close of 4.0585/0630.

According to Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid, lower odds of a rate hike at the September Federal Open Market Committee (FOMC) meeting remained the key driver of the ringgit's appreciation, alongside positive sentiment towards the Malaysian economy. Finance Minister II Datuk Seri Amir Hamzah Azizan noted that Malaysia's impressive economic growth in the first half of 2026, which exceeded Bank Negara Malaysia's 4 to 5 per cent GDP projection, demonstrates the country's economic resilience.

Afzanizam cautioned that market sentiment remains fragile, as higher crude oil prices could push inflation higher towards the end of the year. He noted that if this happens, the rate hike thesis could resurface again. The ringgit strengthened against the Japanese yen to 2.5420/5446 from 2.5496/5526 at yesterday's close and gained against the British pound to 5.4902/4956 from 5.5021/5082.