The Malaysian ringgit is riding its most active trading period in years as global investors pour capital into the country, wagering that its market-beating rally has room to run.
The average daily trading volume rose to RM19.8 bil in 2025, the highest in six years, according to data from Bank Negara Malaysia. This surge, fueled by global fund inflows and market outperformance, was further bolstered by more hedging and bank lending.
Daily volumes remain elevated at around RM18.5bil this year, with Malaysia’s stock index trading near a seven-year high amid the economy’s resilience to 19% US tariffs that became effective last year.
Institutional appetite remains high, with Aberdeen Group overweight on the ringgit, as it forecasts the local currency to appreciate to 3.95 per dollar over the next six months. It closed at 4.05 on Wednesday.
"International investors have had more interest in Malaysia’s markets, and that increased participation has kept volumes elevated even outside periods of market noise,” said Fesa Wibawa, a Singapore-based investment analyst at Aberdeen.
Global volatility is further spurring currency volumes through increased hedging and short-term positioning, Fesa said.
Rising ringgit turnover will increase the allure of investing in Malaysian assets by reducing transaction costs, improving price discovery and volatility of local assets. That would be crucial for global funds betting on a multi-year cycle of investment inflows into emerging markets, particularly as the global "de-dollarization” trend gains momentum.
Malaysia’s economic stability has been a major draw for global investors. The nation’s top treasury official signaled earlier this month that the fiscal gap may have shrunk faster than projected last year, thanks to strong domestic growth.
"Investors have responded well to Malaysia’s policy predictability, solid fundamentals and steady fiscal consolidation - with bond inflows seemingly a key part of this,” Aberdeen’s Wibawa said.
Global funds poured a net US$6bil into ringgit bonds last year, the most since 2021. This demand propelled the debt to the top of Asia’s rankings, with a Bloomberg index of Malaysian bonds returning nearly 17% for dollar-based investors in 2025.
Attention now shifts to BNM’s policy decision on Thursday for the next catalyst. Economists surveyed by Bloomberg expect the central bank to hold interest rates steady.
Analysts also cite rising Foreign Direct Investment as a catalyst for currency volumes, particularly from data center buildouts in the nation. Export services for data centers jumped to RM10.7bil in the first nine months of 2025, up from RM1.2bil over the same period in 2024, according to the central bank.
"Higher ringgit volumes traded are partially as a result of more foreign direct investment demand - such as Microsoft Corp. and Amazon.com Inc. seeking to build data centers in Malaysia - and from generally more on-the-ground economic activity,” said Mingze Wu, a currency trader at StoneX in Singapore.
Along with external investment, domestic banking shifts are also playing a pivotal role in boosting currency trading.
"The rise in ringgit volumes may have partially been due to local banks converting their foreign currency deposits into ringgit to support lending to the domestic economy,” said Philip McNicholas, Asia sovereign strategist at Robeco in Singapore. - Bloomberg
