Ringgit Slips as September Fed Rate Hike Odds Hit 64.8%

The ringgit eased against the US dollar in early trading on July 23, 2026, tracking weakness across major currencies as markets priced in a growing likelihood of another Federal Reserve rate hike in September.

At 8am, the local currency stood at 4.0855/4.0920 against the greenback, compared with 4.0850/4.0890 at the previous close. Analysts pointed to a combination of shifting US rate expectations and lingering geopolitical tensions in West Asia that continue to threaten global oil and gas flows.

Contents

01

FOMC Rate Expectations Weigh on the Ringgit

02

Resilience Backed by Trade and Energy

03

Mixed Performance Across Major Currencies

04

Steady Against ASEAN Peers

FOMC Rate Expectations Weigh on the Ringgit

Bank Muamalat Malaysia chief economist Dr Mohd Afzanizam Abdul Rashid noted that market-implied odds for a September rate hike by the Federal Open Market Committee have climbed to 64.8%, up sharply from 51.5% in early July. “Hence, it is going to be dollar-positive in the near term,” he said, explaining the immediate headwind facing the ringgit and other emerging-market currencies.

The repricing of US interest rate expectations has strengthened the dollar broadly, making it more expensive for investors to hold assets denominated in currencies like the ringgit. The shift comes as markets reassess the trajectory of US monetary policy heading into the second half of 2026.

Resilience Backed by Trade and Energy

Despite the broader dollar strength, SPI Asset Management managing partner Stephen Innes said the ringgit has traded resiliently this week. He attributed this relative steadiness to Malaysia's improving terms of trade, bolstered by recent strong trade data, as well as the country's status as a net energy exporter.

“The local note has traded resiliently this week despite a broadly stronger greenback, reflecting a clear dispersion trade across global foreign exchange markets rather than a simple one-way dollar move,” Innes said. Rising oil prices, partly driven by the same West Asia tensions unsettling broader markets, have offered the ringgit some relative protection.

Mixed Performance Across Major Currencies

The ringgit's performance against other major currencies was mixed. It appreciated against the Japanese yen to 2.5051/2.5092 from 2.5057/2.5081 at Wednesday's close, one of the few bright spots in the session.

Against the euro, the ringgit depreciated to 4.6624/4.6698 from 4.6585/4.6631 previously. It also eased versus the British pound to 5.4648/5.4735 from 5.4612/5.4666. Against the Singapore dollar, the local note was lower at 3.1646/3.1699 from 3.1635/3.1668 at the prior close, and it edged down versus the Thai baht to 12.0924/12.1173 from 12.0787/12.0944.

Steady Against ASEAN Peers

The ringgit held its ground against two key ASEAN currencies. It was flat against the Indonesian rupiah at 228.0/228.4, compared with 228.0/228.3 at the previous close. Against the Philippine peso, the local note was unchanged at 6.61/6.63 from 6.61/6.62, suggesting that regional currency dynamics within Southeast Asia remained relatively stable even as the dollar strengthened elsewhere.