Ringgit Falls as US Dollar Strengthens on Fed Chair Stability
KUALA LUMPUR, January 15, 2026 – The Malaysian ringgit concluded Thursday's trading session on a weaker note, succumbing to the robust performance of ...
KUALA LUMPUR, January 15, 2026 – The Malaysian ringgit concluded Thursday's trading session on a weaker note, succumbing to the robust performance of the US dollar in global currency markets. This downward pressure was primarily attributed to renewed strength in the greenback, which gained momentum following reports indicating that former President Donald Trump has no immediate intentions to replace the current Federal Reserve chairman, Jerome Powell, should he return to office.
The ringgit's depreciation reflects broader market dynamics, where the US dollar's ascent often exerts a gravitational pull on emerging market currencies. Analysts note that the dollar's firmness was catalyzed by political developments in the United States, specifically Trump's public statements affirming his support for the existing Fed leadership. This announcement alleviated prior uncertainties regarding potential shifts in US monetary policy, thereby bolstering investor confidence in the dollar's stability and appeal as a safe-haven asset.
Market participants observed that the ringgit opened the day under mild pressure and gradually extended losses as the dollar index, which measures the US currency against a basket of major peers, climbed steadily. By the close of trading, the ringgit had retreated against the dollar, with the exchange rate settling at a level that underscores the currency's sensitivity to external financial currents. The decline was part of a broader trend affecting Asian currencies, many of which faced headwinds from the dollar's resurgence.
Economic experts highlight that the ringgit's performance is intricately linked to global risk sentiment and US monetary policy expectations. The Federal Reserve's stance on interest rates remains a critical driver of currency movements worldwide. With Trump's comments suggesting continuity in Fed leadership, markets interpreted this as a signal that the central bank's current approach—potentially involving gradual interest rate adjustments—would persist. This perception reinforced the dollar's attractiveness, drawing capital away from riskier assets, including emerging market currencies like the ringgit.
Furthermore, the ringgit's slide occurred against a backdrop of mixed domestic economic indicators. While Malaysia's economy has shown resilience in recent quarters, with steady growth in key sectors such as manufacturing and services, external factors often overshadow local fundamentals in the short term. The country's trade-dependent economy makes its currency particularly vulnerable to shifts in global trade flows and investor sentiment, which are heavily influenced by US economic policies and political developments.
In response to the day's movements, financial institutions and currency traders adjusted their positions, with some opting to increase dollar holdings in anticipation of further appreciation. The ringgit's volatility also prompted discussions among policymakers about potential interventions to stabilize the currency, although no immediate actions were announced. Bank Negara Malaysia, the country's central bank, maintains a vigilant stance, monitoring exchange rate fluctuations to ensure they align with economic fundamentals and do not disrupt financial stability.
Looking ahead, analysts caution that the ringgit's trajectory will continue to be shaped by a confluence of domestic and international factors. Key influences include upcoming US economic data releases, Federal Reserve policy meetings, and geopolitical events that could alter risk perceptions. Domestically, Malaysia's inflation rates, fiscal policies, and growth projections will play pivotal roles in determining the currency's resilience against external pressures.
Investors are advised to maintain a diversified portfolio and stay informed about global economic trends, as currency markets remain highly reactive to news flows. The ringgit's recent decline serves as a reminder of the interconnectedness of global financial systems, where developments in one major economy can have ripple effects across emerging markets. As such, market participants should exercise prudence and consider both short-term volatility and long-term economic fundamentals when making investment decisions involving the Malaysian currency.
In conclusion, the ringgit's lower close on Thursday underscores the enduring impact of US dollar strength on emerging market currencies. With political assurances reinforcing Fed stability, the dollar's appeal has intensified, prompting a recalibration of currency valuations worldwide. For Malaysia, navigating these external headwinds will require a balanced approach that leverages domestic economic strengths while remaining adaptable to global financial shifts. As the situation evolves, stakeholders will closely watch for signals from both US policymakers and Malaysian authorities to gauge the ringgit's future direction in an increasingly complex economic landscape.
