The Malaysian ringgit rose to the strongest level in more than seven years, buoyed by optimism over the country’s ties to the artificial intelligence supply chain and the nation’s growth outlook. The benchmark equity index also advanced.
The currency appreciated as much as 1% to 3.9678 per dollar on Monday, the strongest since May 2018. The FTSE Bursa Malaysia KLCI Index rose as much as 0.9%.
Malaysia’s growth momentum is expected to continue this year, supported by resilient domestic demand and likely strong tourist arrivals. Rapid expansion of the data-center sector is also opening new opportunities and drawing in investments.
T. Rowe Price is most constructive over the ringgit within the emerging-Asia FX space, given that it’s a "destination for data centers with ample energy resources and is doing well in terms of tourism,” said Leonard Kwan, a fixed-income fund manager in Hong Kong.
The ringgit is Asia’s top performing currency so far in January, following two years of outperformance in the region. A strategist at Oversea-Chinese Banking Corp. sees the ringgit potentially strengthening toward the 3.9650 level, supported by gains in the yuan and yen, while Gama Asset Management SA expects the currency to rise to 3.9 per dollar this quarter.
Tech exports, foreign direct investment and Bank Negara Malaysia likely keeping interest rates unchanged this year would help the ringgit outperform Southeast Asian peers again in 2026, Goldman Sachs strategists including Danny Suwanapruti wrote in a note on Saturday. The central bank maintained its policy rate last week.
The return of foreign investors is also giving local assets a boost. Global funds bought $256 million of local stocks on a net basis this month - the most among emerging regional peers - helping to lift the KLCI gauge to the highest since 2018.
"Steady fiscal trajectory and stable economic growth have positioned the country as an attractive destination for foreign investment, particularly in infrastructure, financial services, and renewable energy,” said Tareck Horchani, head of prime brokerage dealing at Maybank Securities in Singapore. - Bloomberg
