Ringgit Flat vs USD as Fed Split Hints at September Hike

The Malaysian ringgit ended Thursday flat against the US dollar but gained ground against most regional currencies, as markets digested a divided vote at the US Federal Reserve that signalled a potential rate hike as early as September.

At 6pm, the local currency was unchanged at 4.0875/0930 against the greenback from Wednesday's close of 4.0875/0915, according to a Bernama report originally published on July 30, 2026. The New Straits Times carried the same Bernama-sourced report later that evening at 6:52pm. The muted performance followed the overnight decision by the Federal Open Market Committee to keep the federal funds rate steady at between 3.50% and 3.75%.

Contents

01

A Divided Fed Keeps Markets Guessing

02

Regional Currencies: Mostly Gains for the Ringgit

03

Major Currencies Weigh on the Local Note

04

What Comes Next

A Divided Fed Keeps Markets Guessing

The Fed's decision was not unanimous. Three of the 12 voting members favoured an increase in the benchmark interest rate, a split that caught the attention of analysts.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the dissent suggests the central bank may be leaning towards raising rates at its next FOMC meeting scheduled for September 15 and 16. “The Fed appears likely to raise interest rates, while higher crude oil prices could reverse the moderation in US inflation recorded in June during the second half of 2026,” he told Bernama.

The US Dollar Index reflected this sentiment, trading 0.17% higher at 101.058 points.

Regional Currencies: Mostly Gains for the Ringgit

The ringgit strengthened against several key regional peers. It rose against the Indonesian rupiah to 225.7/226.0 from 226.1/226.5, appreciated versus the Philippine peso to 6.64/6.65 from 6.65/6.67, and strengthened against the Thai baht to 12.1637/1852 from 12.1971/2138.

The Singapore dollar was the exception among regional currencies, with the ringgit weakening to 3.1701/1746 from 3.1632/1666.

Major Currencies Weigh on the Local Note

Against the major currencies, the ringgit traded broadly lower. It eased against the Japanese yen to 2.5029/5064 from 2.4982/5008, depreciated versus the euro to 4.6863/6926 from 4.6561/6606, and declined against the British pound to 5.4691/4764 from 5.4351/4405.

The divergence between regional strength and weakness against majors reflects the dollar's favourable position following the Fed's hawkish hold, as higher US rates tend to draw capital away from emerging-market currencies.

What Comes Next

With the next FOMC meeting just over six weeks away, currency markets are likely to trade cautiously. The ringgit's near-term trajectory will depend heavily on whether US inflation data over the coming weeks reinforces the case for a September rate hike, and how crude oil prices, a key variable for Malaysia's export earnings, evolve through the second half of 2026.