The Malaysian Ringgit (MYR) has been influenced by several recent factors, including monetary policy adjustments from Bank Negara Malaysia (BNM) and external market pressures. On July 9, 2025, BNM implemented its first interest rate cut in five years, reducing the Overnight Policy Rate by 25 basis points to 2.75%. This decision was taken to bolster the economy amidst global trade tensions and geopolitical uncertainties. Economists have pointed out that this rate cut may lead to a weaker MYR in the short term, particularly as external factors, such as U.S. tariffs on Malaysian exports, could constrain economic growth.
Despite these challenges, analysts forecast a strengthening of the MYR against the U.S. dollar, citing anticipated rate cuts from the U.S. Federal Reserve and Malaysia's robust economic fundamentals. Recent movements show the MYR to USD trading near 30-day lows at 0.2369, aligning with its three-month average amid a stable trading range.
Against other currencies, the MYR appears to be holding up slightly better. The exchange rate to EUR at 0.2049 is 1.1% above the three-month average, while trades against GBP at 0.1781 reflect a similar trend, being 1.3% higher than its average. The MYR has also notably appreciated against the JPY, trading at 36.27 and exceeding its three-month average by 3.5%.
Oil prices could be another influencing factor, with current prices at 65.22 USD, reflecting a 3.7% decline from the three-month average. Given that Malaysia is a net exporter of oil, fluctuations in oil prices will likely play a critical role in the MYR's performance.
Overall, while the MYR faces near-term headwinds due to rate cuts and external tariffs, there are reasons for cautious optimism among analysts about its potential strengthening against the backdrop of economic reforms and favorable conditions in the U.S. monetary policy landscape. Businesses and individuals engaged in international transactions could benefit from monitoring these trends closely.
