Plan for the next holiday: A stronger ringgit also improves Malaysians’ spending power as rates for the Chinese yuan and the euro are more favourable . — AZLINA ABDULLAH/The Star
PETALING JAYA: The ringgit is likely to strengthen gradually for the rest of the year, driven by a softening greenback and domestic factors, say analysts.
The local unit is now trading at a seven-year high against the US dollar, at levels not seen since mid-2018.
The ringgit briefly dipped below the 4.00 mark against the US dollar on Friday.
Year-to-date, the ringgit has strengthened 1.37% to around RM4 per US dollar at press time, from RM4.06 at the start of 2026. The local unit closed the trading week at 4.0025 against the US dollar, but not before testing 3.998 in intraday trade.
Since Datuk Seri Anwar Ibrahim was sworn in as Prime Minister in November 2022, the ringgit has appreciated by nearly 11%, rising from around RM4.50.
SPI Asset Management managing partner Stephen Innes said the move in the US dollar/ringgit pair below the 4.00 psychological mark reflects growing unease over the longer-term outlook for US dollar based assets.
“Investors are becoming increasingly uneasy about the longer-term US story – large fiscal deficits, heavy debt issuance and the sense that the dollar’s premium is slowly being eroded.
ALSO READ: Parents and travellers revising currency strategies
“That has pushed global capital to look for alternatives, rather than doubling down on the greenback,” he told StarBiz.
The US dollar debasement also saw a lift in other Asian currencies.
Innes said Asia is increasingly being viewed “less as a high-risk trade and more as a relatively safe” destination for capital, particularly of economies linked to real economic activity and commodity exports.
“Malaysia fits that bill well.
“The ringgit has benefited from steady export income, reasonable external balances and the perception that policy credibility has been maintained, even as volatility rises elsewhere.”
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid sees Malaysia’s own economic fundamentals as underpinning the ringgit’s resilience.
On this backdrop, he said traders and investors have become increasingly “constructive” on the ringgit.
“The geopolitical temperature has cooled somewhat after the World Economic Forum (WEF) summit, where President Donald Trump gave an assurance that the United States will not use force to achieve its objectives. But, more importantly is the resilience of the Malaysian economy.”
Afzanizam highlighted Malaysia’s better-than-expected economic growth, coupled with Bank Negara’s decision to keep the overnight policy rate (OPR) unchanged this week at its first Monetary Policy Committee meeting, reflects the central bank’s sanguine view of the economy.
“This gives the impression the OPR might be kept steady throughout the year.
“Should the US Federal Reserve (Fed) cut their benchmark rate, this will effectively narrow the gap between the OPR and Fed Fund Rate, leading to greater interest towards the ringgit.”
Malaysia’s economy grew 4.9% in 2025, surpassing official projections of between 4% to 4.8%, while Bank Negara kept the OPR unchanged on Thursday, citing an upbeat growth outlook.
Local government bonds continued to find support, with the 10-year Malaysian Government Securities yield easing 0.3 basis points to 3.54%.
The ringgit’s strength has also been broad based and evident against a range of major and regional currencies. The stronger ringgit also improves Malaysians’ travel spending power.
One ringgit now buys about 1.74 Chinese yuan, up 1.44% year-to-date from 1.72 at the start of the year.
The euro now costs around RM4.70, compared to about RM4.77 at the start of the year.
Against the Singapore dollar, the ringgit strengthened by about 0.9% to a four-year-high of RM3.13 from RM3.16 at the start of the year.
The ringgit has also hit record levels against the Japanese yen, with one ringgit buying about 39.59 yen, up from 38.55 at the start of the year.
Meanwhile, the US Dollar Index (DXY) stood at 98.43, well below the 100-mark that typically signals broad dollar strength.
Looking ahead, Innes expects the US dollar/ringgit pair to stay on a “gently lower path” through the rest of the year, although volatility is likely to persist.
“But the bigger picture still points to gradual dollar softening rather than a renewed uptrend.
“As investors rethink dollar exposure and look for currencies backed by trade flows and real assets, Malaysia continues to benefit from being in the right place at the right time,” he said.
