KUALA LUMPUR: The ringgit extended earlier gains to end higher against the US dollar on Wednesday driven by renewed optimism among market traders following signs of possible de-escalation in the United States-Iran war.

At 6 pm, the local currency rose to 4.0240/0295 against the greenback from Tuesday’s close of 4.0475/0520.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said market traders are observing signs of a possible de-escalation in the US-Iran war as indicated by US President Donald Trump that they are looking to withdraw from the area within a few weeks.

"Therefore, I think that has led to some form of optimism among the traders which led to the acquisition of ringgit,” he told Bernama.

At the same time, he said the US dollar index fell by 0.35 per cent to 99.613 points, indicating a weaker greenback -- a reflection of optimism that the de-escalation in war between US and Iran could happen at some point in the near future.

Meanwhile, Mohd Afzanizam said there is also an indication that the US labour market is softening as it was reported last night that the number of job openings in the US fell to 6.88 million for the month of February, compared to 7.24 million in the month of January.