KUALA LUMPUR: The ringgit extended its gains today, closing firmer against major currencies and most regional peers following Bank Negara Malaysia’s (BNM) move to maintain the Overnight Policy Rate (OPR) at 2.75 per cent.
The central bank, in a statement issued after its Monetary Policy Committee meeting today, said that at the current OPR level, the monetary policy stance is appropriate and consistent with the outlook for continued price stability and sustainable economic growth.
At 6 pm, the ringgit also rose against the US dollar to 3.9070/9115 from 3.9230/9275 at Wednesday’s close.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said BNM’s decision to keep the OPR unchanged had been mostly anticipated by economists.
The attention shifts to BNM’s accompanying statement, he said, noting that it has become more dovish in its economic assessment.
"The central bank has become wary about the impact of the war on Iran on global crude oil prices and how it will shape the global growth trajectory going forward.
"In some sense, BNM is taking a pragmatic approach as its focus is on growth, since risk of higher inflation is very much due to the upward adjustment in cost rather than strong demand. Such pragmatism may have contributed to the appreciation of the ringgit,” he told Bernama.
Mohd Afzanizam also said the potential de-escalation in the United States-Iran war plays an important role in driving risk appetite among the traders.
Meanwhile, SPI Asset Management managing partner Stephen Innes said the ringgit continues to show resilience as the financial markets increasingly priced in a lower probability of further escalation in West Asia, which has helped restore confidence across regional currencies and broader emerging market assets.
He said the potential agreement between Washington and Tehran to end the conflict has reduced some of the geopolitical risk premium that had built up across global markets during the height of the conflict.
"The sharp pullback in crude oil prices has also become a particularly important tailwind for the ringgit and much of Asia’s importer-heavy economies.
"The improving backdrop has also helped support broader risk appetite, with investors rotating back into Asian assets as fears of a global recession begin to ease,” he said.
Furthermore, Innes said, markets are viewing the West Asia conflict as a temporary disruption rather than the beginning of a prolonged energy crisis, and that shift in sentiment has provided renewed support for regional currencies including the ringgit.
At the close, the ringgit traded higher against a basket of major currencies.
It strengthened versus the Japanese yen to 2.4982/5013 from 2.5159/5191 at Wednesday’s close, rose against the British pound to 5.3202/3263 from 5.3443/3504 yesterday, and edged up vis-a-vis the euro to 4.5978/6031 from 4.6189/6242 previously.
The local currency was mostly higher against regional peers.
It gained against the Singapore dollar to 3.0861/0901 from 3.0946/0986 at yesterday’s close, advanced versus the Thai baht to 12.1486/1687 from 12.1866/2074 previously, and inched up vis-a-vis the Indonesian rupiah to 225.4/225.7 from 225.6/225.9.
However, the ringgit eased against the Philippine peso to 6.46/6.48 from 6.39/6.41 at the previous close. - Bernama
