Persistent safe-haven USD demand to keep USDMYR above 4.50
The USD index (DXY) had an impressive week, bolstered by a hawkish shift in the Fed messaging, the Bank of Japan’s cautious stance (JPY: 13.6% of DXY), a deteriorating euro zone growth outlook (EUR: 57.6%), and political instability in Canada (CAD: 9.1%). The DXY surged past 108.0, marking its highest level since November 2022, and driving the ringgit above 4.50/USD, precisely as projected in last week’s FX report. While the Fed delivered a 25 bps rate cut as anticipated, the ringgit weakened due to a more pronounced shift in Fed policy signals, with the updated dot plot suggesting only 50 bps of additional easing in 2025.
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