Ringgit Rises as US-EU Tariff Worries on Dollar, JGB Yields
Ringgit Closes Higher Amid US-EU Tariff Concerns, Easing Japanese Government Bonds
The ringgit ended higher against the US dollar, supported by a softer greenback as investors assessed escalating US-EU tariff concerns and monitored easing yields on Japanese government bonds (JGBs), which helped stabilise regional currency sentiment.
At the close, the local currency strengthened as demand shifted toward emerging market assets, following renewed caution over global trade tensions and their potential impact on growth and inflation dynamics in advanced economies.
Trade tensions weigh on the US dollar
Investor sentiment turned cautious after fresh signals of possible tariff escalation between the United States and the European Union resurfaced. Market participants warned that renewed trade frictions could disrupt global supply chains and complicate the inflation outlook, particularly at a time when central banks remain highly sensitive to price stability risks.
The uncertainty weighed on the US dollar, providing near-term support for regional currencies, including the ringgit.
“Trade policy uncertainty continues to act as a drag on the dollar, especially when combined with softer global risk sentiment,” a regional currency strategist said.
Easing JGB yields support Asian currencies
Further underpinning the ringgit was a decline in Japanese government bond yields, which helped reduce upward pressure on global yields and encouraged capital flows into Asian markets.
The easing in JGB yields followed continued market speculation that the Bank of Japan may proceed cautiously with policy normalisation, easing concerns over abrupt shifts in global liquidity conditions.
Lower global yields typically improve the relative attractiveness of emerging market currencies by narrowing interest rate differentials.
Domestic fundamentals remain supportive
On the domestic front, analysts noted that Malaysia’s stable macroeconomic fundamentals, adequate foreign reserves, and resilient export performance have continued to provide underlying support for the ringgit, even amid volatile external conditions.
Expectations that Bank Negara Malaysia will maintain a measured and data-dependent policy stance have also helped anchor currency stability.
Outlook
Looking ahead, analysts expect the ringgit to trade within a narrow range, with movements largely driven by developments in global trade policy, US monetary expectations, and shifts in global bond markets.
“While short-term volatility may persist, the ringgit is likely to remain relatively supported as long as global yields ease and trade-related risks cap dollar strength,” analysts said.
