KUALA LUMPUR: MBSB Investment Bank Bhd (MBSB IB) expects the ringgit to continue appreciating in 2025, projecting an average rate of around RM4.30 against the US dollar, compared to RM4.56 last year.
In a note today, MBSB IB said the positive outlook was due to recent shifts in economic data, with a bias towards further strengthening and potentially ending the year stronger than its current projection of RM4.25.
"We continue to foresee continued appreciation bias for the ringgit, supported by the expected narrowing of the interest rate differentials.
"This is based on the assumptions that the United States (US) Federal Reserve (Fed) will implement additional one to two interest rate cuts this year, while Bank Negara Malaysia (BNM) is expected to keep the overnight policy rate (OPR) steady at 2.75 per cent,” it said.
MBSB IB said the positive expectation is also supported by Malaysia's robust economic fundamentals, though it faces risks from potential delays in US interest rate cuts due to persistent buildup in inflationary pressures and ongoing global uncertainties.
Meanwhile, the investment bank also forecast an increase in its MBSB Trade-Weighted Ringgit Index (TWRI) to 95.0 by the end of the year.
The bank anticipates the local currency to also strengthen against the currencies of Malaysia’s major trading partners.
"The resilience of the ringgit is underpinned by the stability of the nation's monetary policy settings on the back of sustained economic growth, unlike other central banks that have adopted a more dovish stance and recently eased policy interest rates to spur growth,” said MBSB IB.
MBSB IB highlighted that the recent BNM statement also indicated that the economy is expected to remain well supported.
"This stability is justified by Malaysia's modest and contained inflation environment, providing a solid foundation for the ringgit to appreciate against regional and major currencies. Key events for this month include Malaysia’s Budget 2026 announcement and the US government shutdown,” it added. - Bernama
