Ringgit, Bursa Malaysia Expected to Maintain Positive Trend This Week

The Malaysian Ringgit is anticipated to fluctuate within the RM4.07 to RM4.10 range against the US dollar in the coming week, while the Bursa Malaysia stock exchange is expected to continue its positive trajectory.

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The US inflation and employment data, which showed more moderate developments, put some pressure on the US dollar, but the Fed is still focusing on inflation risks.

According to economic analysts, the Ringgit's performance is largely influenced by investors' anticipation of the US Federal Reserve's interest rate policy. Domestic economic indicators and the flow of foreign capital are also key factors. The Ringgit closed last week at RM4.0885/0930 against the US dollar, showing a slight weakening compared to the previous week and also against the yen, euro, pound, and most ASEAN currencies.

While moderate US inflation and employment data have put some pressure on the dollar, the Federal Reserve remains focused on inflation risks. Analysts suggest that as long as oil prices remain high, a sharp decline in the US dollar is unlikely. However, Malaysia's domestic economic performance provides support for the Ringgit, particularly after the country recorded a stronger-than-expected Gross Domestic Product (GDP) growth of 6 percent in the second quarter of 2026.

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As long as oil prices remain high, the US dollar is not expected to experience a sharp decline.

Despite this positive outlook, a decrease in Bank Negara Malaysia's international reserves by $500 million to $132.1 billion in July, possibly due to outflows from the domestic bond market, warrants attention. Kenanga Investment Bank forecasts that the Ringgit will stabilize by the end of August as the US dollar potentially retraces some of its gains. The Ringgit could strengthen to RM4 against the US dollar by the end of 2026, supported by BNM's overnight policy rate remaining at 2.75 percent and the inflow of foreign direct investment (FDI).

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However, the decrease in Bank Negara Malaysia's international reserves by US$500 million to US$132.1 billion in July, possibly due to outflows from the domestic bond market, needs to be continuously monitored.

Regarding the local stock market, the FBM KLCI index is projected to stay within the 1,710 to 1,740 point range. The main index of Bursa Malaysia rose 23.88 points to 1,724.90 last week, with most sub-indices showing gains, except for the plantation and energy sectors. The financial sector was a significant contributor. The market is also buoyed by corporate earnings announcements, with corporate performance acting as a key catalyst for investor sentiment. Earnings per share (EPS) are expected to recover by 6.3 percent this year, providing a solid foundation for the market. Continuous foreign and institutional fund inflows are also expected to support Bursa Malaysia's performance. However, investors are advised to remain cautious about developments in US monetary policy, geopolitical risks, and commodity price movements.

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The financial sector was among the main contributors with an increase of 270.53 points.