As of December 21, 2024, the Malaysian ringgit (MYR) opened at 4.5055/5100 against the US dollar, slightly lower than the previous day's close of 4.5030/5080. This decline follows the US Federal Reserve's recent guidance on a slower pace of rate cuts, which has raised concerns about the ringgit's stability [1c1c7d2c]. On December 18, the Fed cut interest rates by 25 basis points, but Chair Jerome Powell indicated that further reductions would depend on progress in lowering inflation [56f69aa4]. This has led analysts to predict renewed pressure on the ringgit, which had previously gained 11.4% by September 30, 2024, reaching RM4.1235, but has since depreciated by 8.4% [56f69aa4].
The strong performance of the US economy, highlighted by a revision of GDP growth from 2.8% to 3.1% and a decrease in initial jobless claims, has bolstered the US dollar, leading to reduced expectations for rate cuts by the Federal Reserve in 2025 [1c1c7d2c]. Stephen Innes of SPI Asset Management noted that this situation has contributed to the ringgit's current volatility [1c1c7d2c].
Despite these fluctuations, the ringgit has shown resilience against a basket of other currencies. It strengthened against the British pound and euro but weakened against the Japanese yen and several ASEAN currencies [1c1c7d2c]. Analysts are closely monitoring the upcoming Federal Open Market Committee meeting for further insights into potential impacts on the ringgit [0aec5788].
Local exporters are likely to hoard US dollars in response to the stronger US dollar and potential capital outflows, which could further pressure the ringgit [56f69aa4]. Kenanga Research had previously predicted that the ringgit might approach the 4.50 mark against the dollar due to the lack of urgency for rate cuts in Malaysia [39f729c6]. The long-term value of the ringgit will depend heavily on economic fundamentals and market dynamics [56f69aa4].