Malaysian Ringgit Holds Steady as Hormuz Strait Tensions Counter Dollar Weakness

Morning Session Shows Limited Movement

The Malaysian ringgit opened Friday's session nearly unchanged against the US dollar, settling at 4.0895 per greenback compared to Thursday's close of 4.0875. The limited movement reflects two competing forces: underlying dollar softness ahead of US jobs data and renewed safe-haven demand triggered by security concerns in the Middle East.

Against other major currencies, the ringgit showed mixed performance. It strengthened to 2.5808 per Japanese yen from 2.5892 and improved to 4.7123 against the euro from 4.7162. However, it slipped marginally versus the British pound to 5.5020 from 5.4997.

The US Dollar Index rose 0.25 percent to 99.930 points overnight, supported by resilient labour market indicators. Initial jobless claims in the United States edged up to 199,000 last week from 198,000, marking the third consecutive week below the 200,000 threshold.

Jobs Data Expected to Drive Direction

Market participants are focused on the release of US non-farm payrolls data scheduled for Friday evening Kuala Lumpur time. Consensus estimates project an increase to 88,000 jobs added in July, rebounding from June's 57,000 figure.

Bank Muamalat Malaysia chief economist Mohd Afzanizam Abdul Rashid expects the ringgit to trade within a 4.08 to 4.10 range against the dollar. The labour market's continued strength is likely to provide support for the greenback, he noted, particularly if the official figures align with the stronger employment reading from Automatic Data Processing released earlier this week.

The combination of firm US employment data and elevated oil prices could reinforce dollar demand, keeping Asian currencies including the ringgit on the defensive in the near term.

Strait of Hormuz Tensions Weigh on Risk Appetite

Geopolitical developments in the Persian Gulf are adding a layer of complexity to currency movements across Asia. Fresh details regarding an Iran-Oman agreement on the Strait of Hormuz have emerged, alongside reports of Islamic Revolutionary Guard Corps actions targeting entities it describes as hostile actors aligned with US or Israeli interests.

These developments have renewed concerns about regional security and the stability of energy supply routes. Crude oil prices surged overnight in response, while investors moved toward traditional safe-haven assets including the US dollar.

Stephen Innes, global strategist at Quintex Intel, pointed to the shift in risk sentiment as a key factor constraining the ringgit's upside. The strait handles roughly one-fifth of global oil flows, making any disruption to shipping or perceived threats to passage a material concern for energy-importing economies across Asia.

Regional Currency Performance

Within Southeast Asia, the ringgit posted modest gains against the Singapore dollar, moving to 3.1860 from 3.1881, and strengthened versus the Thai baht to 12.3442 from 12.3628.

It remained virtually flat against the Philippine peso at 6.72 and edged slightly lower against the Indonesian rupiah to 228.1 from 228.0. The mixed performance across regional pairs suggests currency moves are being driven more by global risk dynamics than by bilateral trade or monetary policy divergence.

What Comes Next

The immediate focus for ringgit traders remains the US employment report. A stronger-than-expected payrolls print would likely bolster the dollar across the board, pushing the ringgit toward the upper end of its projected range. Conversely, a weaker reading could provide temporary relief and allow the local currency to test support levels closer to 4.08.

Beyond the jobs data, market participants will continue monitoring developments in the Strait of Hormuz. Any escalation that threatens shipping lanes or prompts further oil price increases would likely sustain safe-haven flows into the dollar, limiting gains for emerging Asian currencies.

Malaysia's export-oriented economy remains sensitive to both energy costs and global risk appetite, making the interplay between geopolitical developments and US monetary policy expectations particularly relevant for ringgit direction in the weeks ahead.