Ringgit seen trading between RM4.05 and RM4.12 this week

The Malaysian Ringgit is poised to trade within a narrow range of RM4.05 to RM4.12 against the US dollar this week. Analysts attribute this forecast to a confluence of global monetary policy developments, foreign investment flows, and international currency market sentiment.

Currently, the local currency has shown weakness, falling to 4.0470/0520 against the US dollar from 4.0280/0320 at the previous Friday's close. By the end of Monday's trading, it had further depreciated to 4.0700/4.0740 per US dollar.

Economists highlight RM4.15 as a critical support level, referencing past market interventions by Bank Negara Malaysia (BNM). A breach of this level could trigger a faster slide towards RM4.20. Conversely, RM4.00 remains a significant psychological barrier, requiring a stronger catalyst, such as a US Federal Reserve interest rate cut in July or a recovery in crude oil prices to around $80 per barrel, for the Ringgit to strengthen towards RM3.98.

Furthermore, a strengthening US dollar index (DXY) above 108 could pressure emerging market currencies, including the Ringgit, pushing the exchange rate closer to RM4.12. Any new US tariff announcements, particularly on Malaysian electrical goods, could negatively impact export prospects and investor sentiment.

However, domestic factors are expected to provide support. Analysts anticipate BNM will maintain its Overnight Policy Rate (OPR) at 3.0% during its upcoming monetary policy meeting. The existing interest rate differential of approximately 1.75 percentage points between Malaysia and the US is seen as maintaining the Ringgit's attractiveness for "carry trade" activities. Robust foreign direct investment (FDI), with RM42 billion recorded in the first quarter of 2026, and the implementation of high-tech projects, including investments by major semiconductor companies, are also expected to boost demand for the Ringgit as project spending accelerates. BNM's substantial international reserves, estimated at around $115 billion in May, provide ample room for the central bank to manage market volatility if necessary.

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