Ringgit Strengthens Amid Election Optimism, Cautious Ahead of FOMC Meeting

The ringgit strengthened against the US dollar on Monday as domestic sentiment ahead of the Negeri Sembilan state election boosted local markets. However, caution due to the upcoming FOMC meeting kept gains in check.

At 8 am, the local currency traded at 4.0830/0930 against the greenback from 4.0885/0935 on Friday's close. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that while positive domestic developments could support the ringgit, external factors such as oil prices and potential US rate hikes dominate market sentiment.

Dr Afzanizam expects trading in the ringgit to remain cautious ahead of the FOMC meeting on July 28-29. The likelihood of a rate hike has increased, supporting the US dollar. Oil prices are also elevated, which could exert upward pressure on inflation and influence the Federal Funds Rate.