KUALA LUMPUR: The ringgit opened higher against the US dollar on Friday amid a higher-than-expected inflation print in the United States.

The Malaysian currency strengthened to 4.2350/2380 against the greenback from 4.2400/2430 at Thursday’s close.

Economic Updates

The increase in the ringgit comes after the US Labor Department reported that the consumer price index (CPI) rose 0.6% in March, the highest level since August 2012.

This news raised concerns about potential inflationary pressures in the US economy, prompting investors to seek refuge in other currencies like the ringgit.

Market Sentiments

Market sentiments were also buoyed by the ongoing recovery in global oil prices, with Brent crude climbing above $63 a barrel on Thursday.

This upward momentum in oil prices is positive for Malaysia, a major oil and gas exporter, and has contributed to the strengthening of the ringgit.

Investor Confidence

Investor confidence in the Malaysian economy has been growing, supported by the government's efforts to ramp up vaccination efforts and revive economic activities.

The successful containment of COVID-19 in the country has also played a significant role in boosting investor sentiment towards Malaysian assets.

Impact on Trade

The strengthening ringgit is expected to have a positive impact on Malaysia's trade balance, making imports cheaper and boosting export competitiveness.

This could potentially lead to an increase in overseas demand for Malaysian goods and services, further supporting economic growth.

Government Policies

The Malaysian government has been implementing various policies to support the economy, including stimulus packages and investment incentives.

These measures are aimed at spurring economic recovery and attracting foreign direct investment, which could further strengthen the ringgit in the long run.

Banking and Finance Sector

The strength of the ringgit is also beneficial for the banking and finance sector in Malaysia, as it reduces currency exchange risks for businesses and investors.

This stability in the currency market is crucial for attracting foreign investors and promoting financial market growth.

Regional Currency Movements

Compared to other regional currencies, the ringgit has been performing relatively well, supported by Malaysia's strong economic fundamentals and stable political environment.

This has positioned the ringgit as a favorable investment option for foreign investors seeking exposure to Southeast Asian markets.

Outlook and Conclusion

Looking ahead, the outlook for the ringgit remains positive, driven by improving economic conditions and favorable market dynamics.

However, ongoing developments in the global economy, including geopolitical tensions and central bank policies, will continue to influence the movement of the ringgit in the coming weeks.

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