KUALA LUMPUR, March 5 — The Malaysian ringgit ended slightly lower against the US dollar on Thursday as escalating geopolitical tensions in the Middle East increased demand for the greenback, which is widely viewed as a safe-haven currency during periods of global uncertainty.
Market sentiment remained cautious as investors monitored the ongoing conflict involving the United States, Israel and Iran, which has heightened geopolitical risks and contributed to stronger demand for the US dollar in global currency markets.
At 6pm, the ringgit weakened to 3.9415/9480 against the US dollar, compared with 3.9395/9465 at Wednesday’s close, reflecting the pressure faced by emerging market currencies amid rising global uncertainties.
Geopolitical Tensions Weigh on Market Sentiment
Economists said that escalating tensions in the Middle East have become one of the key drivers influencing currency markets worldwide. The ongoing conflict has prompted investors to move funds into safe-haven assets such as the US dollar, reducing demand for risk-sensitive currencies including those from emerging markets.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that traders remain highly focused on developments surrounding the geopolitical situation, which has significantly influenced global market sentiment.
According to him, the intensifying tensions involving the United States, Israel and Iran continue to dominate investors’ concerns, prompting a cautious approach in currency trading as markets assess the broader economic implications of the conflict.
Bank Negara Keeps Policy Rate Steady
Meanwhile, Malaysia’s central bank, Bank Negara Malaysia (BNM), decided to maintain the Overnight Policy Rate (OPR) at 2.75 per cent, signalling that the current monetary policy stance remains supportive of economic growth while maintaining price stability.
Afzanizam explained that the decision suggests the central bank is closely monitoring global risks, particularly the geopolitical situation in the Middle East. The steady policy rate could provide some stability for the ringgit in the near term as policymakers continue evaluating the evolving economic environment.
BNM also stated that its Monetary Policy Committee (MPC) will continue to assess developments affecting Malaysia’s economic outlook, including risks related to global growth, inflation and geopolitical tensions.
Mixed Performance Against Major Currencies
At the close of trading, the ringgit showed mixed performance against a basket of major global currencies.
The Malaysian currency strengthened slightly against the British pound, trading at 5.2635/2722 compared with 5.2640/2733 previously. However, it weakened against the euro, falling to 4.5808/5884 from 4.5738/5819, and also slipped against the Japanese yen to 2.5080/5124 from 2.5062/5108.
Mixed Performance Against Regional Currencies
Against regional currencies within Southeast Asia, the ringgit traded mostly mixed.
The local currency appreciated against the Thai baht, strengthening to 12.4711/5016 from 12.5246/5541 previously. However, it eased against the Singapore dollar, trading at 3.0885/0938 compared with 3.0864/0921 earlier.
Meanwhile, the ringgit remained largely unchanged against the Indonesian rupiah at around 233.1/233.6, while it also held steady against the Philippine peso at 6.72/6.74.
Global Uncertainty Continues to Influence Currency Markets
Analysts believe that currency markets will remain volatile in the near term as investors closely monitor geopolitical developments and global economic conditions. Escalating tensions in the Middle East, coupled with concerns over energy prices and global economic stability, are expected to keep demand for safe-haven assets elevated.
As long as geopolitical risks persist, the US dollar is likely to remain supported, potentially limiting the upside for emerging market currencies such as the ringgit.
