BNM: Ringgit weakness due to stronger dollar, prospect of smaller US rate cuts

KUALA LUMPUR: The ringgit has depreciated by 7.8 per cent against the US dollar between Oct 1 and Nov 13 this year, mainly driven by a stronger US dollar in the same period, according to Bank Negara Malaysia (BNM).

In a statement today, the central bank said this is amid expectations for smaller US policy rate reductions following robust US economic data.

According to BNM, in the third quarter of 2024 (3Q24), the ringgit had appreciated by 14.9 per cent against the US dollar, while the ringgit nominal effective exchange rate (NEER) also appreciated by 9.9 per cent.

It noted that this appreciation was partly driven by the shift towards a monetary policy easing stance by the US Federal Reserve (Fed), which has alleviated pressure on regional currencies, including the ringgit.

On a year-to-date basis (as at Nov 13), the ringgit appreciated by 3.1 per cent against the US dollar (NEER: +6.6 per cent).

Moving forward, BNM said movements in the ringgit will continue to be influenced by external developments. "Nevertheless, Malaysia's favourable macroeconomic outlook and ongoing structural reforms would support the ringgit over the medium term. "BNM will continue to ensure the orderly functioning of the domestic foreign exchange market," it said.