Ringgit retreats on profit-taking but ends 2025 on high note

The local currency is expected to appreciate further next year, supported by a strong domestic economy, says analyst.

KUALA LUMPUR:

 The ringgit closed lower against the greenback on the last day of 2025 on profit-taking after the release of minutes from the US Federal Open Market Committee (FOMC) December meeting showed a hawkish tone, but rounded off the year as one of the best-performing currencies in the region.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid said the ringgit fell against the US dollar after the FOMC minutes released overnight indicated that the US Federal Reserve (Fed) remains cautious about inflation risks heading into next year.

“Be that as it may, the ringgit has performed exceptionally well this year, ending higher overall and widely regarded as one of the best-performing currencies in Asia in 2025,” he told Bernama.

Meanwhile, IPPFA Sdn Bhd’s director of investment strategy and country economist Sedek Jantan noted that the currency had appreciated by more than 9% against the greenback over the year, reflecting a meaningful improvement in Malaysia’s macroeconomic and financial fundamentals.

He said today’s pullback in the ringgit did not signal the start of a renewed depreciation cycle; rather, it reflects a short-term adjustment to global dollar dynamics.

“From a macro perspective, Malaysia has entered a phase of structural normalisation, where currency movements are increasingly driven by fundamentals and policy credibility rather than speculative flows,” he added.

At 6pm, the ringgit dropped to 4.0580/4.0620 against the US dollar from 4.0460/4.0505 at yesterday’s close, with analysts expecting the Malaysian currency to appreciate even further next year, bolstered by the strong domestic economy.

At the close, the ringgit traded higher against a basket of major currencies.

It strengthened against the Japanese yen to 2.5907/2.5934 from 2.5948/2.5978 yesterday, rose versus the British pound to 5.4531/5.4585 from 5.4678/5.4738, and appreciated against the euro to 4.7617/4.7664 from 4.7621/4.7674.

The local unit traded lower against its Asean peers.

It fell against the Singapore dollar to 3.1550/3.1584 from 3.1526/3.1566, declined against the Thai baht to 12.8560/12.8756 from 12.8404/12.8620, depreciated against the Indonesian rupiah to 243.2/243.6 from 241.2/241.6, and fell versus the Philippine peso to 6.88/6.90 from 6.87/6.88.

The currency market will be closed tomorrow for the New Year holiday. - FMT