**USD/MYR Settles at 3-Week Low, Posts Weekly Loss**
*By Violeta Gaucan, originally published on TradingPedia.com*
The US dollar-Malaysian ringgit (USD/MYR) exchange rate closed the week at its lowest point in three weeks, as a combination of local and global factors weighed on the greenback’s momentum. The pair declined for the week, highlighting a shift in investor sentiment as the Malaysian ringgit gained strength amidst improving regional risk appetite and some signs of moderation in US economic data.
### USD/MYR Closes at 3-Week Low
The USD/MYR pair settled at 4.6700 at the end of the week, marking the lowest level since late August. The ringgit’s daily gain against the dollar extended a multi-session rally, causing the week’s cumulative loss for the pair to exceed 0.6 percent. This shift signals a tentative move by market participants away from the previously dominant US dollar, reflecting a blend of local resilience and global dollar fatigue.
### Key Drivers Behind the Weekly Loss
Multiple factors contributed to the ringgit’s appreciation and the greenback’s relative decline:
– **Improved Regional Risk Appetite:** Positive sentiment across Asian financial markets and expectations of supportive policy in China buoyed riskier assets and regional currencies.
– **Easing US Inflationary Pressures:** Recent US data have pointed to a slight cooling in inflation, prompting investors to reassess the likelihood of further aggressive Federal Reserve rate hikes.
– **Malaysia’s Economic Fundamentals:** Recent data and market observations point to a resilient Malaysian economy, underpinned by stable commodity exports and prudent central bank policies.
– **Portfolio Flows:** There have been indications of renewed interest by foreign investors in Malaysian bonds and equities, providing support to the ringgit.
### Regional and Global Sentiment Provides Tailwind
The ringgit’s performance was not isolated but mirrored by movements across other regional currencies as the Asian market responded positively to external cues. This trend was driven by several factors:
– **Chinese Economic Optimism:** Recent policy easing signals and stabilized economic data from China, Malaysia’s largest trading partner, supported Malaysian asset markets and the ringgit.
– **Dollar Correction:** After months of gains, the US dollar faced profit-taking and renewed caution, especially as US Treasury yields stabilized and global investors diversified into emerging markets.
– **Improving Trade Data:** Malaysia’s latest export numbers exceeded some market expectations, supporting the country’s trade surplus and underpinning ringgit demand.
### Impact of US Economic Data
US economic releases played a pivotal role in setting the pace for USD/MYR this week. Key data included:
– **CPI and PPI Readings:** US Consumer Price Index (CPI) and Producer Price Index (PPI) reports indicated a softening in price pressures, adding to the perception that the Federal Reserve may pause or end its rate hiking cycle sooner rather than later.
– **Retail Sales Figures:** Somewhat mixed US retail sales and labor market data fueled speculation that the world’s largest economy is cooling, dialing back bullish bets on the dollar.
– **Federal Reserve Communications:** Fed officials’ remarks were closely watched. A less hawkish tone, combined with concrete data, amplified expectations of a pause in rate tightening.
– **Treasury Yields:** US government bond yields retreated from recent highs, reducing the attractiveness of the US dollar compared to higher-yielding or riskier emerging market currencies like the ringgit.
### Domestic Developments Strengthen the Ringgit
Malaysia’s domestic picture also contributed to the ringgit’s stability and gains, as both policy makers and underlying fundamentals responded favorably to challenging conditions. Some encouraging factors included:
– **Bank Negara Malaysia Policy:** Malaysia’s central bank kept its key Overnight Policy Rate (OPR) steady, signaling its confidence in economic recovery and price stability. This supportive stance reassured investors and helped anchor the ringgit.
– **Inflation Under Control:** Inflation in Malaysia
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