KUALA LUMPUR, Sept 30 — The Malaysian ringgit closed marginally higher on Monday but still hit a new 39-month high against the greenback on continued expectation of another cut in US interest rates after the latest inflation data there.

At 6 pm, the ringgit traded at 4.1210/1280, up from Friday’s close of 4.1230/1280.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid attributed the ringgit’s upward resilience to continued expectation that the US Federal Reserve (Fed) is on track to keep cutting interest rates further in light of the lower inflation trajectory in the United States.

"The ringgit maintained its upward bias against the greenback today and went to as high as 4.09 level in the early morning session, last seen in April 2021 (41-month high), before retracing back towards 4.12 in the second half of the day,” he told Bernama.

A key Fed inflation gauge — the personal consumption expenditures (PCE) price index — rose 2.2 per cent per cent in August, lower than expected, it was reported last Friday.

And despite rising geopolitical tensions due to the killing of Hezbollah’s top leader last Friday, Afzanizam highlighted that the ringgit appears to be navigating challenges effectively.

Stephen Innes, the managing partner at SPI Asset Management, also maintained that the ringgit’s overall trajectory remains positive, as China’s stimulus measures will ease global growth concerns and bolster Malaysia’s export sector.

In response to deflationary pressures, the Chinese government has introduced a robust stimulus plan, marking its most significant intervention since the pandemic with plans to reduce borrowing costs and inject additional funds into the economy.

Nevertheless, Innes cautioned that the upcoming US non-farm payroll data on Friday could significantly impact the Fed’s rate hike path, and that the US election may cast a large shadow over Asian currencies.

"If Trump wins, we could be staring down the barrel of hefty tariffs on China, which would undoubtedly send shockwaves through regional markets,” he warned.

The ringgit traded lower against a basket of major currencies, weakening against the Japanese yen to close at 2.8899/8936 compared to 2.8804/8841 on Friday. It was lower against the euro, ending at 4.6106/6162 from 4.6009/6064 and slipped against the British pound to 5.5193/5260 from 5.5178/5245 last week.

The local currency also slid against Asean currencies, except versus the Indonesian rupiah, increasing to 272.1/272.6 from 272.5/273.0 last week.

It ticked down against the Singapore dollar to 3.2175/2217 from 3.2146/2187 at Friday’s close, eased to 12.8037/8248 from 12.7202/7407 against the Thai baht and was flat against the Philippine peso at 7.35/7.37. — Bernama