Election Hopes Lift Ringgit, But FOMC Anxiety Caps Gains

The ringgit opened higher against the US dollar on Monday, buoyed by positive domestic sentiment ahead of the Negeri Sembilan state election, though caution over an imminent Federal Reserve policy meeting kept the gains in check.

At 8am on July 27, 2026, the local currency strengthened to 4.0830/4.0930 against the greenback, up from 4.0885/4.0935 at Friday's close, according to a Bernama report. The modest rise reflects a market pulled in two directions: domestic political optimism on one side and external monetary policy anxiety on the other.

Contents

01

Domestic Election Tailwind

02

FOMC Shadow Over the Market

03

Mixed Performance Against Other Currencies

04

What to Watch This Week

Domestic Election Tailwind

The Negeri Sembilan state election is the immediate domestic driver behind the ringgit's firmer open. Early voting is scheduled for Tuesday, July 28, with the main polling day set for August 1, 2026. Market participants are watching for any signals that the state result could shift the national political landscape.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that while the ringgit could draw support from positive domestic developments, external factors continued to dominate market sentiment.

FOMC Shadow Over the Market

The US Federal Open Market Committee meets on July 28 and 29, and the likelihood of a US rate hike has increased, lending support to the dollar and capping the ringgit's upside. Afzanizam expects the ringgit to trade between RM4.09 and RM4.10 against the US dollar on Monday.

Oil prices remain elevated, which could exert upward pressure on inflation and in turn influence the Federal Funds Rate. “As such, trading in the ringgit is likely to remain cautious,” Afzanizam said.

A separate factor easing pressure on the dollar was a pause in the US-Iran conflict. Washington suspended its nearly two-week campaign of strikes against Iran, while Tehran said it had ended its retaliatory attacks. The de-escalation supported risk appetite, with oil prices retreating and the dollar weakening.

Mixed Performance Against Other Currencies

The ringgit traded mostly higher against major currencies at the opening. It strengthened against the Japanese yen to 2.4956/2.5018 from 2.4976/2.5008 and appreciated against the euro to 4.6530/4.6644 from 4.6556/4.6613. However, it slipped against the British pound to 5.4516/5.4650 from 5.4442/5.4509.

Against regional peers, performance was mixed. The ringgit edged up against the Indonesian rupiah and strengthened versus the Philippine peso, but weakened against the Thai baht and eased against the Singapore dollar.

What to Watch This Week

The ringgit's near-term trajectory hinges on two events unfolding almost simultaneously: the Negeri Sembilan election outcome and the FOMC rate decision. A smooth election could provide a floor for the local currency, while any hawkish surprise from the Fed would push the ringgit back towards the RM4.10 level Afzanizam flagged.

For now, the market is pricing in a delicate balance between homegrown optimism and the pull of US monetary policy.