PETALING JAYA: BIMB Securities Research expects the ringgit to strengthen further through the remainder of 2026, supported by resilient external fundamentals, a recovery in tourism, stronger exports and a gradual narrowing of the interest rate gap between Malaysia and the United States, while arguing that global macroeconomic conditions will remain the dominant driver of the local currency.
The research house forecasts the ringgit to average RM3.95 against the US dollar this year before ending 2026 at RM3.90, expecting the appreciation to be supported by a sustained current account surplus, favourable external sector dynamics and Bank Negara Malaysia maintaining the overnight policy rate (OPR) at 2.75% amid steady economic growth and manageable inflation.
In a report, it also challenged the common view that general elections are a key determinant of market performance.
“The historical record suggests that the ringgit and FBM KLCI do not necessarily outperform after a general election, even during the pre-2000 period when the ruling coalition commanded a comfortable two-thirds majority,” said BIMB Securities.
The brokerage emphasised that historical market performance showed election outcomes alone have not been reliable predictors of either the ringgit’s direction or the performance of Malaysian equities.
Instead, the country’s financial markets have largely tracked global risk sentiment, US interest rates, commodity prices and cross-border capital flows.
It added that while political stability remains supportive for investor confidence, the greater risk would be any significant reduction in the government’s parliamentary majority that could cast doubt over policy continuity and reform execution.
Beyond the political landscape, BIMB Securities remains constructive on the ringgit’s medium-term outlook, citing resilient exports, recovering tourism, sizeable foreign currency deposits and expectations of a narrower federal funds rate-OPR differential as structural supports for the local currency.
Malaysia’s external sector is also expected to receive a further lift from both merchandise and services exports.
BIMB Securities said the goods surplus should strengthen again, driven by the artificial intelligence-led semiconductor upcycle, Malaysia’s exemption from US semiconductor tariffs, continued benefits from China+1 supply chain diversification and potentially higher commodity prices if geopolitical tensions disrupt global energy supplies.
On the services side, it said the tourism recovery has restored an important source of foreign exchange earnings after the lockdowns. “The subsequent recovery in tourism has lifted the travel balance back into surplus, helping the overall services return to positive territory by 2025,” the brokerage pointed out.
Malaysia welcomed 26.6 million foreign visitors in 2025, surpassing pre-lockdown levels, as BIMB Securities noted that the recovery has become increasingly diversified, with visitors from China, India, Indonesia and Thailand accounting for a growing share of arrivals, reducing Malaysia’s reliance on the Singapore market.
It also highlighted Malaysia’s growing importance within regional supply chains, observing that re-exports accounted for roughly 27% of gross exports in the first five months of 2026, compared with less than 5% in the early 1990s.
This underscored the country’s expanding role in global production networks despite the lower value-added contribution of re-export activities.
Meanwhile, foreign currency deposits have climbed to more than 11% of total banking system deposits, providing a sizeable pool of funds that could potentially be converted into ringgit as confidence in the local currency improves.
