KUALA LUMPUR: Malaysia is expected to sustain ringgit strength on a steady overnight policy rate (OPR) and narrowing fiscal gap, said CIMB Securities Research.
The fading 'Trump trade' phenomenon drove a broad-based G10 FX rally against the dollar, bringing the DXY down 0.4 per cent - though remaining above 104.0. through the session.
The firm said regional currencies rebounded against the dollar, with Ringgit (+0.1 per cent) seeing little reaction.
"This is despite the continued cooling of inflation in Malaysia, even as Finance Minister II Datuk Seri Amir Hamzah Azizan said the country is set for sustained currency strength and increased investments amid faster economic growth, a narrowing fiscal gap, and steady policy rates," it said in a note.
Meanwhile, on macro wrap, CIMB Securities said the US Purchasing Managers' Index (PMI) and initial claims outperformed expectations, highlighting continued US economic resiliency.
The firm noted that Malaysia's headline inflation rose below expectations at 1.8 per cent year on year (yoy) in Sep (Consensus: 1.9 per cent, Aug: 1.9 per cent) amid the broad-based slowdown in goods (both durable and non-durable) and services inflation.
The Core Consumer Price Index (CPI) also decelerated to 1.8 per cent, it added.