Can the Ringgit Keep Rising?

 

The ringgit touched the RM3.92 mark against the US dollar recently, a level not seen since June 2018. This keeps the ringgit as Asia’s best performer, outperforming major currencies including the Japanese yen and Singapore dollar. Broad US dollar weakness, improving regional sentiment, and a host of domestic fundamentals are said to be underpinning the ringgit’s surge. 

The rally sparks optimism but its staying power beyond the first half of financial year 2026 (1H26) is unclear. The ringgit’s appreciation is still largely a dollar story, driven by expectations that the upcoming new Federal Reserve (Fed) chair appointee could usher in a more dovish rate-cut cycle. Fed chair Jerome Powell’s leadership term ends in May, and US President Donald Trump is now expected to nominate a new Fed chair within days. Looking at Bloomberg consensus, the ringgit has already hit its year-end target of 4.00 against the US dollar. While that may be the case, dollar-ringgit pair may end the year at around 3.80. 

The ringgit’s recent appreciation will broadly benefit Corporate Malaysia, which is driven by domestic demand, but exporters will feel the squeeze on margins. Many companies stand to gain from a stronger ringgit, as lower import and procurement costs could help support margins. These sectors include aviation, automotive, cement, construction, consumer, media, renewable energy, real estate and telecommunications. On the other hand, export-oriented sectors could be negatively affected by the ringgit’s appreciation, given their largely US dollar-denominated revenue and lack of offsetting US dollar costs. These include sectors such as gloves, technology, electronics manufacturing services, upstream oil and gas, petrochemicals, and metal producers.

 

 

The ringgit’s gain can be attributed to:

-Interest rate differentials have narrowed.

-Trade surplus is maintained even with recent appreciation.

-Malaysia’ GDP growth exceeds U.S. GDP growth.

-Inflation in Malaysia is lower than in the U.S.

-Strong inflows of FDIs.

-Responsible fiscal measures; and

-Prudent monetary policy. 

How long will this last? Good question. May do another article later. 

References:

How long can the ringgit keep rising? Elim Poon, The Star, 27 Jan 2026

 

Ringgit gains will favour domestic-driven sectors, weigh on exporters — HLIB, Jazlin Zakri/theedgemalaysia.com, 28 Jan 2026