The Malaysian ringgit is making headlines after gaining strength against the US dollar, thanks to Moody’s recent reaffirmation of the country’s sovereign credit rating. But what does this mean for investors, businesses, and the overall economy? Let’s dive into how this credit rating impacts Malaysia’s financial landscape and what factors could shape the ringgit’s future.

Moody’s has maintained Malaysia’s sovereign credit rating at ‘A3’ with a stable outlook, signaling confidence in the government’s fiscal policies. This rating reflects global credit agencies’ trust in Malaysia’s ability to manage its debts and restore financial health. One key reason for this positive assessment is Malaysia’s commitment to reducing its fiscal deficit—from 4.3% of GDP in 2024 to a projected 3.8% this year.

For investors, this rating is significant because it assures them that Malaysia remains a reliable and stable market. A strong credit rating attracts foreign investments, strengthens investor sentiment, and helps stabilize the local currency. As a result, the ringgit saw an immediate boost, opening higher at 4.3710/4.3790 against the US dollar compared to last Friday’s close of 4.3750/4.3800.

What’s Next for the Ringgit? Global Factors at Play?

While Moody’s rating offers a positive outlook, the ringgit’s long-term stability depends on global market movements. Investors remain cautious ahead of the upcoming US Federal Open Market Committee (FOMC) meeting, which could influence market sentiment. The FOMC is expected to maintain the US Federal Funds Rate at 4.5%, but any shift in interest rate policies could impact global currencies, including the ringgit.

How the Ringgit is Performing Against Other Currencies?

Despite global uncertainties, the ringgit showed positive momentum against several major currencies, strengthening to 2.8066/2.8119 against the Japanese yen, appreciating to 4.5747/4.5831 against the euro, rising to 12.9696/13.0037 against the Thai baht, increasing to 3.2411/3.2476 against the Singapore dollar, and inching higher to 7.49/7.51 against the Philippine peso. However, the ringgit slightly weakened against the British pound (5.4454/5.4554) and remained mostly unchanged against the Indonesian rupiah (270.2/270.8).

The Bottom Line: Will the Ringgit Continue to Strengthen?

While Moody’s stable rating has provided a short-term boost to the ringgit, its long-term performance will depend on Malaysia’s continued economic recovery and external global factors. The narrowing of the fiscal deficit is a positive step, but investors should remain watchful of US monetary policies, global trade developments, and regional economic trends.

Source: Free Malaysia Today