Hawkish Federal Reserve Bets and Oil Shock to Keep Ringgit Around 4.00 Against US Dollar Next Week
KUALA LUMPUR, March 29, 2026 — The Malaysian ringgit is anticipated to hover around the 4.00 level against the US dollar in the upcoming week, influenced primarily by heightened uncertainty stemming from a prolonged conflict in West Asia and rising oil prices. Market analysts highlight that these factors are bolstering the US dollar as investors seek refuge amidst geopolitical and economic tensions.
Prolonged West Asia Conflict and Its Impact
Kenanga Investment Bank Bhd (Kenanga IB) noted in a recent market outlook that investors are likely to maintain a strong preference for the US dollar, using it as a safeguard against the risk of renewed escalations in West Asia. The US had imposed a 10-day pause on strikes targeting Iran’s energy facilities, but with that period ending, apprehensions about potential conflict flaring up again have surfaced.
Kenanga IB further pointed out that the ringgit initially outperformed, but this was offset by a late-cycle correction. The benchmark Brent crude oil price holding close to USD 100 per barrel has intensified inflation worries in the US, encouraging investors to embrace a more hawkish stance on Federal Reserve (Fed) monetary policy. As a result, the greenback has garnered stronger support in global markets.
The investment bank anticipates that the West Asia conflict may extend into the third quarter of 2026 (3Q 2026), compelling the Fed to maintain a restrictive monetary policy stance until the fourth quarter of 2026 (4Q 2026).
Expert Commentary on Inflation and Oil Market Dynamics
Dr. Mohd Afzanizam Abdul Rashid, Chief Economist at Bank Muamalat Malaysia Bhd, commented that despite the US administration’s efforts—specifically former President Donald Trump’s 10-day extension aimed at reopening Iran’s Strait of Hormuz—the crude oil market remains unsettled. The ongoing concerns are translating into persistent volatility in oil prices.
Dr. Mohd Afzanizam explained that Fed policymakers are currently engaged in a complex balancing act: growing inflation risks are increasingly overshadowing earlier concerns about slow employment growth. This “policy dilemma” complicates the Fed’s trajectory and influences currency markets globally, including the ringgit’s performance.
Given these circumstances and the broader economic fallout from the oil shock, Dr. Mohd Afzanizam expects the ringgit to maintain its weakness, sustaining a rate close to RM4.00 against the US dollar in the near term.
Recent Ringgit Performance and Currency Market Trends
Over the past week, the ringgit fluctuated between RM3.92 and RM3.99 against the US dollar but lost momentum, dipping to RM4.00 around midday last Friday amid rising demand for the safe-haven dollar. Market skepticism about a potential ceasefire in Iran is driving this demand.
By the close of trading on Friday, the ringgit settled lower at 4.0105/0140 against the US dollar, compared with 3.9330/9415 a week earlier. The local currency also weakened against a basket of other major currencies during the week, including the Japanese yen, British pound, and euro.
In regional currency comparisons, the ringgit depreciated against its ASEAN counterparts. It slipped against the Singapore dollar, Thai baht, Indonesian rupiah, and Philippine peso, reflecting broader regional market dynamics amid the geopolitical and economic uncertainties.
Outlook
With geopolitical tensions in West Asia showing no immediate signs of resolution and global oil prices remaining elevated, the ringgit faces continued pressure. Coupled with an expected hawkish Federal Reserve policy to combat inflation, the local currency is predicted to stay around the RM4.00 mark against the US dollar through the forthcoming weeks.
Investors and market watchers will closely monitor developments in the Middle East conflict and subsequent Fed policy indications to gauge the ringgit’s trajectory moving forward.
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This report is based on insights from Kenanga Investment Bank Bhd, Bank Muamalat Malaysia Bhd, and market data provided by Bernama.