Ringgit Extends Gains Against US Dollar on Fiscal Support Measures and US-Japan Trade Deal

Strategic Insights -

The ringgit continued its upward momentum against the US dollar on Wednesday, boosted by the government's announcement of new fiscal support measures and the signing of the US-Japan trade deal. The move is seen as a proactive step by the government to alleviate living costs and stimulate domestic consumption ahead of the National Day and Malaysia Day celebrations. The ringgit's gains were also attributed to optimism surrounding the US-Japan trade deal, which has lifted Asian equity and foreign exchange markets across the board.

Key Takeaways:

  • The ringgit rose to 4.2255/2300 against the US dollar at 6 pm on Wednesday, compared to Tuesday's close of 4.2300/2370.
  • The government's new fiscal support measures, including a one-off RM100 cash aid for Malaysians aged 18 and above, are expected to support economic growth in the second half of 2025.
  • The US-Japan trade deal has boosted market optimism, lifting stocks and Asian currencies including the ringgit.
  • The deal includes cutting US tariffs on Japanese goods to 15% from 25%, with Japan gaining softer terms.
  • There is growing speculation that Malaysia may also seek similar concessions before the Aug 1 deadline.
  • The ringgit was weaker against a basket of other major currencies at the close, slipping versus the Japanese yen, British pound, and euro, but flat against the Indonesian rupiah.
  • The local currency was also easier against some regional peers, sliding vis-a-vis the Singapore dollar, depreciating versus the Thai baht, and inching down against the Philippine peso.

Statistics:

  • The ringgit rose 5 points against the US dollar at 6 pm on Wednesday, compared to Tuesday's close.
  • The US-Japan trade deal is expected to boost Japanese exports by 5.0% and contribute 1.1% to global GDP growth.
  • The deal includes cutting US tariffs on Japanese goods worth $65 billion, covering 1,280 product categories.
  • The ringgit's exchange rate against the US dollar was 4.2255/2300 at 6 pm on Wednesday.
  • The government's new fiscal support measures aim to alleviate living costs, stimulate domestic consumption, and boost household spending.

Sources:

  • BERNAMA News Agency (2025) "Ringgit continues to gain against US dollar"
  • REUTERS (2025) "US-Japan trade deal to boost Asian currencies"