KUALA LUMPUR: The US dollar is poised to conclude the week with a significant surge, marking its largest weekly increase in over a month. This positive performance is largely attributed to its perceived status as a safe-haven asset amidst escalating anxieties surrounding the ongoing conflict in the Middle East and the potential ramifications for the global economy.

Market sentiment has been heavily influenced by the unpredictable nature of the situation, leading investors to seek refuge in the stability and security associated with the US dollar. The conflict’s potential to disrupt global supply chains, particularly energy markets, has further fuelled this demand.

Impact on Ringgit & Regional Markets

The strengthening US dollar has implications for the Malaysian Ringgit and other regional currencies. A stronger dollar typically makes imports more expensive for countries like Malaysia, potentially contributing to inflationary pressures. It also strengthens the US dollar's purchasing power, which can impact trade balances.

Analysts are closely monitoring the developments in the Middle East, assessing the potential for further escalation and its impact on oil prices, a key driver for the Malaysian economy. A sustained rise in oil prices could put downward pressure on the Ringgit and negatively affect Malaysia's trade surplus.

Economic Repercussions & Investor Concerns

Beyond the immediate conflict, concerns about the broader economic repercussions are weighing on investor confidence. The potential for supply chain disruptions, increased volatility in financial markets, and a slowdown in global economic growth are all contributing to the dollar's appeal.

The Federal Reserve's monetary policy stance is also under scrutiny. While the market anticipates a pause in interest rate hikes in the near term, the possibility of further tightening remains if inflation persists. This could further bolster the dollar's strength.

Looking Ahead: What to Expect?

The coming week will be crucial in determining the trajectory of the US dollar and the Ringgit. Key factors to watch include:

• Developments in the Middle East conflict and its impact on oil prices.
• Economic data releases from the US, including inflation and employment figures.
• Central bank policy announcements and signals regarding future interest rate decisions.

Investors are advised to remain cautious and closely monitor these developments, as they could significantly impact market volatility and currency movements. The Ringgit’s performance will likely be closely tied to the evolving geopolitical landscape and global economic conditions.