Second Finance Minister Amir Hamzah said inflows into equity and bond markets in January strengthened the ringgit, and the currency will continue to follow the same trajectory. — Bloomberg
KUALA LUMPUR: The ringgit, Asia’s top-performing currency in the past year, still has potential to gain as the economy continues to perform strongly, Second Finance Minister Datuk Seri Amir Hamzah Azizan says, indicating that growth forecasts may be revised higher.
The ringgit was undervalued last year and the market was reacting to that, Amir Hamzah said in an interview with Bloomberg TV’s Avril Hong yesterday in Kuala Lumpur.
Inflows into equity and bond markets in January strengthened the ringgit, and the currency will continue to follow the same trajectory, he added.
“I think the ringgit still has potential because growth is still intact in this country and it’s still growing well,” he said, four months after a similar interview in which he correctly predicted that the currency would strengthen past four ringgit versus the dollar.
The currency pared losses as he spoke. It traded about 0.3% lower at 3.9437 against the dollar at 5pm in Kuala Lumpur, amid a decline in most Asian currencies.
Malaysia’s economy has proved resilient against US tariffs, prompting the central bank to keep the benchmark interest rate unchanged since July.
The economy is pulling ahead of much of South-East Asia as domestic demand stays resilient and investment flows into electronics, data centres and energy transition projects help offset turmoil in global trade.
Growth hit 4.9% in 2025, better than the government’s forecast of a 4% to 4.8% expansion.
It expects growth to moderate to 4% to 4.5% this year, though Amir Hamzah said he was optimistic of an upward revision to the forecast when Bank Negara Malaysia (BNM) reviews the estimate in the next few months. At the same time, he said he saw no catalyst for inflation to creep up this year.
BNM governor Datuk Seri Abdul Rasheed Ghaffour said yesterday he was cautiously optimistic of 2026 even as he sees tailwinds coming in amid high uncertainty.
“What’s important for us is to ensure that we provide a conducive environment from monetary stability and financial stability for us to be able to achieve sustainable growth,” he said at a forum in Kuala Lumpur.
BNM is likely to keep interest rates steady this year even as economic growth is set to moderate, according to Datuk Seri Khairussaleh Ramli, president and group chief executive officer of Malayan Banking Bhd
, the nation’s largest lender.
Government efforts to strengthen the country’s economic fundamentals are bearing fruit. The ringgit has risen 3% this year after gaining around 10% in 2025.
The rally is being driven by a range of structural factors beyond the dollar’s broad weakness, such as rising investment flows and the country’s growth momentum.
Malaysia also aims to narrow the budget deficit to 3.5% of gross domestic product this year, from a target of 3.8% in 2025, as it seeks to convince investors it’s serious about fiscal consolidation. Amir Hamzah said the final numbers for 2025 would be concluded end-February, adding that the 3.8% target was “within reach”.
Prime Minister Datuk Seri Anwar Ibrahim is counting on improved tax collection and lower subsidy spending, even as he grapples with diminished petroleum-related revenue and a relative slowdown in growth.
Amir Hamzah said the government is deliberately trying to reduce its reliance on oil and gas, adding that it’s comfortable with the current oil price range as it was already factored into the annual budget.
“The key for Malaysia is diversification,” he said. “The more we push for economic diversification, the more we improve our fiscal space and tax collections, the resilience of the fiscal space of the government is much better.” — Bloomberg
