Ringgit Opens Higher Against US Dollar as Trump Signals West Asia De-escalation

KUALA LUMPUR, March 24 — The Malaysian ringgit opened higher against the US dollar on Tuesday as global market sentiment improved following signals of de-escalation in the West Asia conflict from U.S. President Donald Trump. At 8.01 am, the local currency strengthened to 3.9200/9400 against the greenback, compared with 3.9330/9415 at last Thursday’s close, reflecting renewed confidence among investors after recent geopolitical tensions began to ease. Malaysian financial markets had been closed on March 20 and March 23 due to the Hari Raya Aidilfitri holidays, making Tuesday the first trading day for the week. Market analysts said the ringgit’s stronger opening was largely influenced by improved global risk appetite after Trump signalled a potential reduction in tensions in the Middle East, particularly surrounding the ongoing crisis involving Iran and the strategic Strait of Hormuz.SPI Asset Management managing partner Stephen Innes said the development had a noticeable impact on global energy markets. Oil prices fell sharply after the announcement, easing financial pressure on oil-importing countries and reducing demand for the US dollar as a safe-haven currency. According to him, crude oil prices dropped nearly 10 per cent, suggesting that markets interpreted the signal as a reduction in geopolitical risk, at least in the short term.However, he noted that the reaction in financial markets remains cautious. Investors appear to be trimming defensive positions rather than fully shifting away from the US dollar.“If markets truly believed in a durable de-escalation, we would likely see a stronger rally in global risk assets and a deeper decline in the US dollar,” Innes explained. Meanwhile, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the US Dollar Index (DXY) fell about 0.7 per cent to 98.95, reflecting weaker demand for the greenback after Trump reportedly extended the deadline for potential military action against Iranian infrastructure by five days. The easing tensions also triggered a “risk-on” sentiment in global markets, with major benchmark stock indices such as the S&P 500 and Nasdaq rising by more than one per cent. At the same time, Brent crude oil prices declined around 11 per cent to about US$99.94 per barrel, further supporting positive market sentiment. Despite the stronger opening against the US dollar, the ringgit traded lower against several other major currencies during early trading.The local currency weakened slightly against the Japanese yen, trading at 2.4733/4863 compared with 2.4716/4771 previously. It also edged lower against the British pound to 5.2626/2895 from 5.2246/2359, and slipped against the euro to 4.5499/5732 from 4.5139/5237. Against regional currencies in Southeast Asia, the ringgit showed mixed performance. It strengthened against the Indonesian rupiah to 230.6/231.9 and also gained against the Philippine peso to 6.50/6.54. However, the Malaysian currency weakened against the Singapore dollar, trading at 3.0735/0897 compared with 3.0671/0740 previously, and also slipped against the Thai baht to 12.0868/1556. Economists say that while signs of easing tensions in the Middle East have temporarily supported financial markets, the broader geopolitical situation remains uncertain. Any escalation in the conflict could quickly reverse market sentiment and drive investors back toward traditional safe-haven assets such as the US dollar.Global markets have been highly sensitive to developments in the region because the Middle East plays a crucial role in global energy supply. Disruptions to major oil shipping routes, particularly the Strait of Hormuz, have the potential to trigger sharp fluctuations in commodity prices and currency markets worldwide.For now, investors are expected to remain cautious as they monitor further diplomatic developments and geopolitical signals that could influence the direction of the global economy and financial markets in the coming weeks.