Ringgit ends lower as US election results unfold

KUALA LUMPUR: The ringgit closed lower against the US dollar today, snapping two days of gains, as the US presidential election results poured in, said an economist.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid said Donald Trump was seen to be the leading contender, reinvigorating the view of possible higher tariff and expansionary fiscal policies shaping the US economy in 2025.

“The immediate uncertainty is how the Federal Reserve (Fed) would respond to the latest information — for example, the election results — although the actual policy changes or revisions would take some time to materialise.

“We believe the Fed might want to cut the Federal Funds Rate this week and perhaps in December,” he told Bernama.

However, he said, next year the US central bank might be cautious about risks of higher inflation due to possible changes in key policies, namely on tariffs, mass deportation of illegal immigrants, and permanent tax cut measures (measures enacted in 2017), among others.

“For now, a high degree of uncertainty would mean demand for the US dollar and therefore, we will see (trading in) the ringgit remain guarded,” he added.

Meanwhile, SPI Asset Management managing director Stephen Innes said Trump is set for a dramatic return to the White House, with Pennsylvania delivering the decisive blow.

“When the Associated Press called the election for Trump, the ringgit took an instant hit, dropping 1.3% to trade at RM4.40, with potential for even steeper declines if Trump goes ahead with his promise of a 60% tariff rate on (goods from) China.

“What initially looked like a tight race has now turned into a near landslide, with Trump set to secure over 300 electoral votes — a resounding endorsement of his policy vision. Fortunately, markets had prepared for this outcome,” he said.

According to Innes, the US 10-year Treasury yields only nudged up by 11 basis points, with investors being in a cautious wait-and-see mode and still counting on a Fed rate cut tomorrow, which could temper the dollar’s move this week.

“While it’s clear the full impact of a potential trade war isn’t yet priced in, Asia foreign exchange can take a brief sigh of relief.

“The modest bump in yields suggests that traders believe Congress might temper Trump’s more ambitious fiscal plans, potentially restraining the inflationary impacts, and may contain the dollar rally,” he said.

At 6pm, the local note decreased to 4.4000/4.4070 versus the greenback from yesterday’s close of 4.3415/4.3505.

Moreover, the ringgit was lower against a basket of major currencies.

It fell vis-a-vis the British pound to 5.6751/5.6841 from yesterday’s close of 5.6361/5.6478, edged down versus the Japanese yen to 2.8558/2.8606 from 2.8525/2.8586, and depreciated against the euro to 4.7313/4.7388 from 4.7283/4.7381.

The local note traded mostly lower versus Asean currencies.

It weakened vis-a-vis the Singapore dollar to 3.3073/3.3128 from 3.2953/3.3023 at yesterday’s close, went down against the Indonesian rupiah to 277.8/278.4 from 275.6/276.3 previously, and dropped versus the Philippine peso to 7.50/7.51 from 7.44/7.46.

However, the ringgit appreciated against the Thai baht to 12.8768/12.9048 from 12.9165/12.9491 yesterday.