According to analysts, the American central bank’s move to slash rates by 50 basis points on Wednesday, the first in four years, will loosen tight monetary policies and inject confidence in weakening currencies.

Bank Negara Malaysia (BNM) governor Abdul Rasheed Ghaffour said besides the US rate cut, Malaysia’s positive economic outlook and structural reforms are also propelling the ringgit’s rise.

He said the ringgit’s recent recovery is driven by the shift in expectations of lower interest rates in major economies, particularly the US, as well as Malaysia’s strong economic performance.

“Malaysia’s positive economic prospects and structural reforms, complemented by initiatives to encourage inflows, will continue to provide enduring support to the ringgit.

“The Monetary Committee Policy (MPC) upcoming overnight policy rate (OPR) decision will continue to be guided by developments that affect the risks to domestic growth and inflation going forward,” he told Bernama.

The ringgit is hovering around RM4.20 against the US dollar today.

Meanwhile, CIMB, in its Daily Digest research report, stated yesterday that the regional currencies strengthened against the greenback, with the ringgit (+0.4%) continuing to lead the pack, followed by the Singapore dollar (+0.1%) and the Thai baht (+0.1%).

RHB noted that lower global interest rates are generally economic-positive for Asean economies.

“Bucking the rate cut bandwagon may be observed by both BNM and the Monetary Authority of Singapore (MAS), where we expect the BNM’s OPR to stay at 3% for 2024, while MAS is to keep policy parameters unchanged for the whole year,” it said in a research report.