UCSI University Malaysia finance associate professor and CME research fellow Dr Liew Chee Yoong.
PETALING JAYA: The ringgit’s rally against the greenback is expected to boost profit prospects for import-heavy domestic industries, while weighing on exporters through adverse currency translation.
The ringgit climbed to another new high at yesterday’s closing, touching 4.0615, which was its strongest level last seen in early March 2021.
Analysts said the rally has been driven by shifting US interest-rate expectations alongside improving domestic fundamentals, including stronger external balances supported by ongoing policy reforms.
Domestically-oriented and import-intensive industries like the consumer, automotive, aviation, construction and healthcare sectors stand to benefit the most from a stronger ringgit as it lowers the cost of imported goods, raw materials and intermediate inputs, helping to ease cost pressures and potentially support margins or consumption volumes.
“For the automotive sector, a stronger ringgit lowers costs as manufacturers import a significant amount of components and, in some cases, fully built vehicles from overseas.
“Consumer discretionary and consumer staples firms are also beneficiaries, particularly large food and beverage (F&B) producers like Nestle (M) Bhd
and Fraser & Neave Holdings Bhd, as many key inputs like cocoa, coffee and sugar are priced in US dollars,” Tradeview Capital fund manager Neoh Jia Man told StarBiz.
He added that these larger F&B players also tend to have stronger pricing power, which allows them to retain the cost savings rather than pass them on to consumers, supporting margins.
Neoh said, to a lesser extent, the healthcare sector is also poised to gain from a firmer ringgit, though the impact may be mixed. Local pharmaceutical manufacturers such as Pharmaniaga Bhd and Duopharma Biotech Bhd may see margin support as a significant portion of their raw material inputs are priced in US dollars.
“Glove manufacturers will definitely suffer due to their heavy reliance on US dollar export revenues. Hospital operators could also be affected as a stronger ringgit might make it less attractive for foreign patients to seek treatment in Malaysia”, he said.
iFAST Capital research analyst Kevin Khaw Khai Sheng said banks, consumer, construction and real estate are among the sectors to see gains from the ringgit’s strengthening.
Khaw said the ringgit’s appreciation in the banking space typically correlates with improved foreign investor interest, especially in the equity market.
“When foreign investors enter the market, a significant portion of their funds typically flows through the banking system. On top of that, a stable or gradually appreciating currency supports credit demand and improves asset quality for banks,” he said.
As for the consumer sector, Khaw opined that companies like MR DIY Group (M) Bhd is poised to benefit from the ringgit’s gains against the US dollar, as a significant portion of their inventory is sourced overseas, thus reducing import costs.
“Construction players will also benefit for a couple of reasons. Firstly, the country’s economic growth next year is expected to be quite positive, supporting demand for construction activity.
“Many construction companies rely on imported raw materials, hence a stronger ringgit helps reduce material costs, which in turn supports margins for the sector,” he said.
However, this may not be the case for export-oriented businesses including those in the furniture, technology and glove manufacturing industries as foreign receipts are likely to narrow on adverse foreign exchange (forex) dynamics.
As it is, Neoh said export growth has already started to slow, easing to around 7% in November from about 16% in October.
The slowdown has been largely driven by weaker growth in sectors such as electrical and electronics, rubber products (mainly gloves) as well as palm oil and chemicals.
“Technology companies, in particular, are the most at risk. In the latest earnings season, many tech players have already started to reflect the impact of US dollar depreciation, recording the impact of forex losses in their earnings.
“That said, institutional investors typically strip out these forex losses as one-off items, so it does not impact sentiment as much, with regards to currency depreciation. Investors are much more concerned on how long the artificial intelligence upcycle can last for tech companies, as well as potential risks from the US semiconductor sectoral tariffs,” he said.
UCSI University Malaysia finance associate professor and CME research fellow Dr Liew Chee Yoong said in terms of foreign investor sentiment, the appreciation of the ringgit has helped improve Malaysia’s relative attractiveness by reducing currency risk and enhancing return stability.
However, the impact has been uneven across asset classes.
“Evidence to date suggests that bond markets have benefited more clearly from improved currency stability, with periods of meaningful foreign inflows reflecting confidence in macro fundamentals and yield differentials.”
In contrast, Liew said foreign equity flows have been more volatile, changing between net buying and selling depending upon global risk appetite, sector-specific trends, and valuation considerations.
“This difference highlights an important point, that is currency appreciation is supportive but not sufficient on its own to drive sustained foreign equity inflows. Investors continue to focus on earnings growth, structural reform, corporate governance, and global liquidity conditions,” he said.
The ringgit’s gains have been underpinned by broad US dollar weakness, with the US Dollar Index (DXY) trading largely below the 100-point level—a key psychological benchmark—since late May. The index stood at 97.876 at press time and is down nearly 10% year-to-date.
Readings below the 100-point level on the DXY signals broad-based weakness in the US dollar against major currencies.
Despite foreign equity outflows amounting to RM21.1bil year-to-date, the ringgit is still holding up. In fact, it was hailed as Asia’s best-performing currency this year against its regional peers.
The ringgit appreciated by 2.9% against the British pound on a year-to-date basis, 13.5% versus the Indonesian rupiah, 10.5% against the Philippine peso, 8.5% against the Japanese yen, 3.8% versus the Singapore dollar and 0.3% against the Thai baht. However, it weakened by 2.8% against the euro.
This was due to capital being circulated within Malaysia, with funds shifting from equities into the bond market amid expectations of further rate cuts by the US Federal Reserve next year.
MGS foreign holdings increased month-on-month to RM298bil in November 2025 from RM292bil in October 2025. Moreover, it increased year-on-year from RM277bil in November 2024.
“It is still largely a US dollar story as we look at the strengthening of the ringgit against the greenback, although it is a two-way dynamic. Malaysia’s fundamentals are supportive, but the main driver has been US dollar depreciation, primarily due to Federal Reserve expected rate cuts.
“At the same time, Malaysia’s macroeconomic fundamentals remain supportive, underpinned by fiscal consolidation, steady economic growth and consistent monetary policy. These conditions have allowed Bank Negara to keep the overnight policy rate unchanged and are likely to continue doing so, thereby narrowing interest-rate differentials,” he said.
Looking ahead, Liew said the US dollar / ringgit is likely to trade within a narrow and range-bound band for the remainder of this year, reflecting much of the near-term positive news which has already been priced in.
“A range around 4.00 to 4.15 appears reasonable, with short-term movements driven primarily by global risk sentiment and US dollar dynamics rather than domestic shocks.
“Going into 2026, the outlook remains constructive but conditional. Under a baseline scenario of gradual global monetary easing, stable Malaysian growth, and continued portfolio inflows, US dollar/ringgit could trade broadly within 4.00 to 4.25.
“A more pronounced appreciation would require sustained foreign inflows and a clear downshift in US interest-rate expectations, while renewed global risk aversion could reverse recent gains,” he said.
