An Upward Trajectory for the Malaysian Ringgit
The Malaysian Ringgit is anticipated to strengthen significantly, with projections indicating a rise to RM3.93 against the US dollar by the middle of 2026.
This optimistic forecast, provided by Malaysian Rating Corporation Bhd (MARC Rating), is firmly anchored in Malaysia’s robust domestic economic fundamentals, ongoing successful fiscal reforms, and the expected softening of the US dollar, which provides a key external tailwind.
Dr. Ray Choy, MARC Rating’s chief economist, highlighted that despite the persistent global headwinds experienced throughout 2025, including elevated geopolitical and trade tensions that often pressure emerging market currencies, the local currency has demonstrated remarkable resilience.
This stability and performance are a clear reflection of the market’s growing confidence in the underlying strength of the Malaysian economy and the effectiveness of its current reform agenda.
When discussing the potential for the Ringgit’s value, Dr. Choy emphasized that the exchange rate is always viewed as a currency pair, meaning its movement is not solely dictated by domestic factors.
It inherently reflects not only various external risks but also the comparative fundamental economic strengths and monetary policy trajectories of both Malaysia and the United States.
The overall consensus suggests a general, healthy appreciation of the currency is firmly on the cards, continuing its trajectory into the next year.
Robust Fundamentals Attracting Global Capital
A crucial element reinforcing the positive outlook for the Malaysian currency is the sustained confidence shown by international investors, a sentiment that has been significantly bolstered by the government’s continued commitment to policy reforms under the 13th Malaysia Plan.
This consistent reform trajectory, coupled with Malaysia’s notable improvement in the world competitiveness rankings, rising to the 23rd position, is reinforcing the country’s appeal as a stable and growing investment destination.
OCBC Bank senior ASEAN economist, Lavanya Vekataswaran, provided further context during a panel session, noting that the appreciation observed in the Ringgit’s value during the current year is directly tied to sustained foreign capital inflows into various Malaysian financial assets.
This inflow pattern suggests a broader portfolio diversification strategy by global investors, who are increasingly moving away from the US dollar and allocating capital into more promising regional markets.
The positive sentiment is evident across Malaysian capital markets, with inflows seen in both the equity and bond segments.
Although the specific monthly trend of these inflows may have become somewhat mixed in recent times, the overall currency has remained well-supported.
Malaysia is particularly well-positioned to benefit from this global diversification trend, with Malaysian Government Securities (MGS) specifically identified as a primary beneficiary of this important strategic shift in capital allocation by international funds.
Monetary Policy and External Tailwinds
The projected strengthening of the local currency is further underpinned by several powerful external tailwinds, particularly those related to anticipated changes in global monetary policy, which will positively impact the Ringgit’s standing.
Dr. Choy addressed the question of whether an expectation for the Malaysian Ringgit to hit RM4.00 against the US dollar by the year-end was overly optimistic, stating that the currency’s overall trajectory remains supported by these key external factors.
A major contributing element is the expectation that the US Federal Reserve may implement three to four interest rate cuts over the next 12 months.
In contrast, Malaysia is only expected to ease its rates once during the same period.
This differing pace of monetary policy adjustment is anticipated to create a favorable interest-rate differential, which traditionally serves to attract capital and support the appreciation of the local currency.
Moreover, Dr. Choy suggested that most of the negative impacts related to global trade tensions have already been fully “priced in” by the markets, indicating that a potential easing of these negative factors may occur in 2026.
Crucially, global and regional investors are increasingly recognizing Malaysia’s enhanced political stability, which has recently led to positive allocation inflows into various Malaysian assets.
This combination of resilient domestic fundamentals and the improving global monetary conditions is expected to sustain the Ringgit’s appreciating trend well into the next year.
