Forex

The ringgit has weakened as the US dollar strengthened, with USD/MYR rising from a late-February low of RM3.8895 to RM4.1377 on June 24, amid uncertainty over the Federal Reserve’s policy path under new chairman Kevin Maxwell Warsh. Malaysia’s fundamentals have provided support, including a current account surplus that widened to 3% of GDP and a 70.5% year-on-year jump in electrical and electronics exports in May, alongside AI data-centre investment. Several institutions have kept their year-end USD/MYR targets in the RM3.95–RM4 range.

The U.S. dollar index (DXY) fell 0.39% on Friday, its biggest one-day drop since June 11. The greenback has slid 0.44% over two sessions, marking its most notable pullback since early May. A key U.S. inflation reading in line with expectations, alongside a 4% drop in oil prices, has cooled bets on further Federal Reserve tightening this year, with expectations narrowing to about a 25-basis-point hike. The move also unwound part of a three-day rally sparked by hawkish remarks from new Fed Chair Kevin Warsh.

The Indian rupee rebounded slightly after touching an intraday low on Wednesday, ending at 94.66 per dollar. State-run banks were seen intervening, likely on behalf of the Reserve Bank of India, to limit further depreciation. The currency’s weakness was driven by a stronger U.S. dollar index (DXY), which rose to a 13-month high as expectations grew for a Federal Reserve rate hike later this year.

The dollar index (DXY) rose to 101.71, its highest level in 13 months. Markets lifted the implied probability of a Federal Reserve rate hike in July to 35% from 9% a week earlier, while September pricing moved above 70%. Selling pressure in technology stocks and a stalemate in U.S.-Iran talks added to safe-haven demand. The euro, sterling, Australian dollar and yen all weakened, with the yen sliding to 161.66, close to its lowest level since 1986.

The dollar index (DXY) rose to 101.44 on Wednesday, its highest level in 13 months since May 13, 2025. Demand was supported by safe-haven buying after a sharp pullback in global technology shares and by firmer expectations for Fed rate hikes. Markets are pricing a 37% chance of a 25-basis-point hike in July and 70% in September, according to CME FedWatch. The yen slid to 161.57, while the euro touched $1.1375 and sterling and the New Zealand dollar also came under pressure.

Malaysia’s ringgit is expected to remain under pressure this week, trading in a RM4.13–RM4.15 range versus the US dollar. The outlook reflects continued market expectations of a possible 25basispoint US Federal Reserve rate hike later this year, which has supported the dollar and weighed on regional currencies, including the ringgit. Last week, the ringgit weakened from 4.0555/0600 to 4.1340/1395 and also fell against the pound, yen, euro and major ASEAN currencies.

The dollar rose to 161.3 yen, closing in on the 40-year high of 161.96, keeping markets focused on whether Japanese authorities will intervene. The Federal Reserve’s latest dot plot showed nine officials still see a rate hike by year end, adding to pressure on the yen in a low-liquidity holiday window. While the Bank of Japan lifted rates this week to a 31-year high, they remain well below global levels, and the interest-rate gap has supported the dollar.

The Indian rupee strengthened for a second straight day on Friday, ending 7 paise higher at 94.33 against the U.S. dollar as expectations of faster progress on an interim India-U.S. trade deal lifted sentiment. Brent crude futures fell 0.65% to USD 79.33 per barrel, while the dollar index slipped 0.08% to 100.76. Despite a sharp selloff in local equities, foreign institutional investors were net buyers of Indian stocks worth Rs 4,859.07 crore, according to exchange data.

The Canadian dollar fell to 70.56 U.S. cents on Friday, its lowest level in about a year. Markets sharply raised expectations for U.S. rate hikes after the Fed’s June FOMC meeting, including an 88% probability of a hike in September, helping lift the U.S. dollar index 1.3% over the week. The Bank of Canada has held its policy rate at 2.25% for five straight decisions, widening the policy gap with the United States. The move has been reflected in the DXY, giving the dollar index clear short-term upward momentum.

The Indian rupee rose 0.83% this week, its strongest weekly performance since the week ended April 3 and the best in nearly 11 weeks. Support came from recent Reserve Bank of India measures aimed at attracting dollar deposits and lowering hedging costs, alongside continued foreign inflows into Indian government bonds and a pullback in Brent crude that eased imported inflation pressure. The rupee came under mild pressure on Friday as the dollar index climbed to a one-year high and Middle East talks faced a setback, but it still finished the week notably stronger.