Ringgit Weakens as Brent Crude Surges Above $100 Amid Inflation Fears

The Malaysian ringgit weakened against the US dollar on Wednesday as Brent crude prices surged above $100 per barrel, fueling concerns about inflation and prompting traders to await crucial US price data.

Brent futures climbed over 1.4 percent to $99.37 per barrel in early Asian trading before touching the psychological $100 level, according to Bank Muamalat Malaysia chief economist Mohd Afzanizam Abdul Rashid. The escalation of tensions between the US, Israel, and Iran has raised supply disruption risks from the Gulf, which could push central banks to maintain tight monetary policies.

Afzanizam noted that all these factors suggest a heightened risk of elevated inflation rates induced by higher energy prices, leading to tighter policy stances by the Federal Reserve and Bank of Japan next week. The US consumer price index (CPI) data release on Friday will be a key indicator, with consensus estimates pointing to 3.4 percent headline inflation for August, unchanged from July.

The ringgit's decline extended across major and regional currencies at the close. Against the euro, it slipped to 4.7275/7333 from 4.7151/7191, while the British pound strengthened to 5.5043/5110 from 5.4926/4974.