KUALA LUMPUR, Jan 23 (Bernama) -- Bursa Malaysia’s benchmark index recouped earlier losses to settle higher, maintaining a more than six-year high, buoyed by continued buying interest in technology stocks, while the strengthening of the ringgit against the US dollar further lifted investor sentiment. At 2.27 pm today, the local currency strengthened to 3.9992 versus the greenback, its strongest level in more than seven years. It was last seen at this level on June 18, 2018, at 3.9960/9990. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 2.85 points or 0.17 per cent to 1,719.99 from yesterday’s close of 1,717.14. The index surpassed its previous peak of 1,719.00 recorded on Feb 26, 2019. The barometer index opened 1.30 points lower at 1,715.84 and moved between an intraday low of 1,711.89 in early trade and a high of 1,723.41 in late afternoon before slipping slightly toward the close. However, market breadth was negative with decl...
Key Takeaways
The dollar’s 7% drop may mark the end of its pullback
US growth and equity outperformance continue to support the greenback
Capital flight fears and hedging pressures have faded
Fed policy expectations remain stable despite political noise
Strategists say further dollar weakness needs a new shock
A strong US economy makes sustained dollar depreciation difficult
The long-anticipated US dollar downturn is losing momentum, raising doubts over whether last year’s decline marked the start of a lasting trend — or simply a pause in a powerful multi-year rally.
According to analysis by Reuters, the dollar’s 7% fall last year now looks increasingly like the limit of its pullback, despite political pressure and trade tensions reigniting hopes for a weaker greenback. As US President Donald Trump heads to the World Economic Forum in Davos, sentiment around the dollar has notably stabilised.
Market fears of foreign capital fleeing US assets never fully materialised, while currency hedging demand faded. Instead, US economic growth accelerated, and the dollar’s interest-rate advantage largely held firm. Even renewed debates around Federal Reserve independence failed to shake long-term policy expectations.
After suffering its worst first half in the floating exchange-rate era, the dollar index found support mid-year and rebounded about 2% from its lows. On a broader real effective basis, the dollar has only given back 7% of its massive 47% gain accumulated between 2011 and end-2024.
The reason is clear: US economic and equity market outperformance remains hard to dislodge. US GDP ended last year growing at an annualised pace above 4%, while World Bank forecasts put 2026 US growth at 2.2%, more than double that of the euro zone or Japan. Meanwhile, S&P 500 earnings growth is expected to exceed 15%, outpacing Europe’s STOXX 600.
Currency strategists are turning cautious. Societe Generale notes that keeping the dollar weak may be incompatible with maintaining the world’s strongest economy, while Deutsche Bank argues that another leg lower now requires a new catalyst, such as a sharp correction in US equities.
Without such a trigger, the market appears stuck: strong US growth props up stocks — and in turn, supports the dollar.
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