KUALA LUMPUR, July 12 — The Malaysian ringgit rose to its highest against the dollar for the past six months, as expectations grew for an interest rate cut in the US where inflation was stabilising.

The ringgit reached a high of 4.6630 in early trade this morning, the highest it has been been since the start of the year and outperforming fellow gainers, the Chinese yuan and Indonesian rupiah.

According to the Edge Markets, the Australia and New Zealand Banking Group (ANZ) said the development bode well for Malaysia’s trade balance.

“Firstly, we expect the goods trade surplus to rise in a sustainable manner,” the bank noted.

“Secondly, we anticipate a narrowing of the deficit on the financial account, owing to higher net foreign direct investment flows.”

However, it said this was contingent on the Malaysian currency maintaining its gains.

On Tuesday, US Federal Reserve chairman Jerome Powell said the decision to lower interest rates in his country must pre-empt further declines in inflation to avoid overcorrection, prompting markets to take this as an indication of looming cuts.

The US raised interest rates rapidly and aggressively to as high as 5.5 per cent in a bid to control runaway inflation, causing an influx towards the dollar for interest income.

https://www.malaymail.com/news/money/2024/07/12/ringgit-climbs-to-six-month-high-versus-greenback-now-regions-top-performer/143471