KUALA LUMPUR, July 14 (Bernama) -- Bursa Malaysia extended its rally to close more than one per cent higher on Tuesday, lifted by strong buying interest in oil and gas as well as banking counters as investors positioned for potentially firmer energy prices following renewed hostilities between the United States and Iran. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) surged 21.50 points, or 1.26 per cent, to close at its intraday high of 1,719.94 from Monday’s close of 1,698.44. The benchmark index opened 1.25 points higher at 1,699.69, and slid to its intraday low of 1,698.21 in the early session. On the broader market, losers led gainers 548 to 538, while 585 counters were unchanged, 1,031 untraded, and 22 suspended. Turnover expanded to 3.52 billion units valued at RM2.75 billion from 3.09 billion units valued at RM2.23 billion on Monday.
Malaysia's central bank is ramping up efforts to support the ringgit after the currency became Asia's weakest performer this month, highlighting growing pressure from global interest-rate expectations and political uncertainty.
The ringgit has fallen 4.3% against the US dollar in June, underperforming most regional peers as investors rotate toward dollar assets amid expectations that US interest rates could remain higher for longer.
Why Is the Ringgit Under Pressure?
Several factors have weighed on sentiment:
External Factors
- Rising expectations of further US rate hikes
- Stronger US dollar globally
- Reduced appetite for emerging-market currencies
Domestic Factors
- Political uncertainty ahead of upcoming state elections
- Foreign fund outflows from regional markets
- Cautious investor positioning
The combination has pushed the ringgit to become the worst-performing Asian currency this month.
Bank Negara's Response
Rather than intervening aggressively in currency markets, Bank Negara Malaysia is focusing on increasing foreign-exchange inflows.
Key initiatives include:
- Encouraging companies to repatriate overseas earnings
- Promoting the conversion of foreign currency proceeds into ringgit
- Supporting onshore foreign-exchange market liquidity
The central bank reiterated that Malaysia's economic fundamentals remain supportive of the currency over the medium term.
Why This Matters for Investors
A weaker ringgit presents both opportunities and risks.
Potential Beneficiaries
- Export-oriented manufacturers
- Technology exporters
- Companies generating significant US dollar revenue
- Tourism-related businesses
Potential Headwinds
- Import-dependent sectors
- Companies with high US dollar debt exposure
- Businesses facing rising imported input costs
Investors may increasingly favour companies with natural US dollar earnings hedges if currency weakness persists.
What Investors Should Watch
Several catalysts could influence the ringgit's direction in the coming months:
- US Federal Reserve policy signals
- Foreign fund flows into emerging markets
- Progress in corporate earnings repatriation efforts
- Domestic political developments following state elections
A stabilisation in US rate expectations could provide relief for the ringgit, while continued dollar strength may keep pressure on regional currencies.
Investor Takeaway
Bank Negara's latest move reflects confidence that the ringgit's weakness is being driven more by external factors than domestic economic deterioration.
While near-term volatility may persist, the central bank is attempting to strengthen currency support through higher foreign-exchange inflows rather than direct market intervention.
For investors, the key question is whether improving inflows and Malaysia's economic fundamentals can offset the powerful pull of a strong US dollar in the months ahead.
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