The ringgit has hit a 20-month high against the US dollar.

On Friday, it broke the RM4.30 support and rallied to RM4.2980, as traders expect the Federal Reserve to cut interest rates more aggressively.

“Judging from the interest futures contract, it seems that the Fed might be inclined to deliver a 50 basis points reduction, which would bring the Fed Funds Rate from 5.50% to 5.00%,” the chief economist of Bank Muamalat Malaysia said.

“This would effectively narrow the gap with Malaysia’s 3.00% overnight policy rate.”

The likelihood of a more aggressive rate cut from the Fed is driven by cooling inflation in the US.

The shift in odds has triggered a wave of selloff for the greenback, which in turn has benefitted the ringgit.

On top of this, the local note has also faced significant inflows from foreign investors, citing policy reforms and the boom in data centers.

Since July, MYR has strengthened by:

• 9.64% versus the greenback (RM4.2980).

• 4.64% versus the Singapore dollar (RM3.3211).

• 5.90% versus the Euro (RM4.7833).

• 5.24% versus the Pound (RM5.6696).

The Malaysian market is now the 2nd best performer in Asia.

The FBMKLCI surged to 1,684 points for the week ending 6 Sept, placing it as the 2nd best performer among its Asian peers.

It is currently at a 2-year high, up 13.6% on a year-to-date basis.

The uptick is mainly driven by foreign investors.

Last week, they made net purchases everyday in the equity market, totaling RM800 million.

This is the fourth week in a row of net inflows from them, with the buy volume exceeding a 2-year high (refer to chart below).

Meanwhile, the daily average foreign participation in the Bursa market has steadily increased.

From its peak during the first week of September, the participation is almost 5 times higher than the low in January 2023.

Which stocks were the hot picks?

Tenaga Nasional, Public Bank, and Maybank were the top 3 buys from foreigners last week, with a combined inflow of RM800 million.

Local retailers and institutions, meanwhile, were taking profits.

They net sold a total of RM793.7 million in these 3 stocks.

For more details on weekly stock movements, read MIDF's full report here.

Gold hits a new all time high of $2,582/ounce (RM357/g).

Gold prices jumped on Friday, beating record levels, as optimism of a bigger rate cut from the Fed fuels bullish momentum in the markets.

Prices of the precious metal gained 0.9% to $2,582 per ounce.

Gold market bulls and analysts are locking in a milestone of $3,000 per ounce by the end of the year.

Historically, gold is inversely correlated to the dollar index, as the precious metal is sensitive to interest rate decisions from the Fed.

Apart from rate cuts, escalating geopolitical tensions could also sustain gold’s upward movement.

GXBank revises earnings rate and cashback, receives backlash from customers.

All good things must come to an end.

But for GXBank, the end may have arrived too soon, as customers fume over the bank’s decision to revise its earnings rate and unlimited cashback.

Its daily interest, previously 3.0% pa, will be reduced to 2.0% pa from October onwards.

As for the unlimited 1% cashback, GX said they’ll be adjusting the rate on 6 November, with the specifics yet to be announced.

Right after the announcement, netizens on Instagram said that they will switch to other banks.

That’s the reality of a free market, folks.

If you’re not competitive, consumers will leave.

AEON Bank: No more 3.88% pa and 1.5% cashback.

Effective 31 August, the pink bank has adjusted its earnings rate to 0.88% pa for your main account and 3.00% pa for savings pots.

This makes it the lowest among all four digital banks, similar to GXBank.

Its cashback, previously 1.5%, has been reduced 0.5%.

That said, AEON has introduced several new promotions until 31 December (1% service fee waive on international transactions and RM5 discount for overseas ATM withdrawals).

With these two banks lowering their rates, here is the latest comparison of cash apps and digital banks.

I’ll update them again in October.

That’s all for this week’s newsletter!

Disclaimer: The information contained in this newsletter is for informational and educational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice.

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