Ringgit strengthens to 3.9990, buoyed by Bank Negara Malaysia’s move to keep the overnight policy rate unchanged at 2.75%.
The local currency was trading at 3.9990 this afternoon, buoyed by Bank Negara Malaysia’s (BNM) decision yesterday to keep the benchmark overnight policy rate (OPR) unchanged at 2.75% even as Malaysian government bonds rallied and the US dollar weakened.
Kenanga Research, which describes the 4.00/USD-level as “strong resistance”, said the ringgit drew support from a softer US dollar and BNM’s decision to keep the policy rate unchanged.
It noted the US Dollar Index fell below 99, pressured by spillovers from heightened volatility in Japanese government bonds and concerns that European investors may reduce their holdings of US Treasuries.
The ringgit has also been boosted by the country’s resilient economy, moderate inflation, and crucially, political stability.
Malaysia’s stock index is trading near a seven-year high and the country’s economic growth has surpassed expectations in recent quarters, defying the impact of higher US tariffs.
The economy is projected to have grown 5.7% in the fourth quarter of 2025, according to the statistics department ahead of the release of the actual gross domestic product (GDP) next month.
Annually, Malaysia’s economic growth in 2025 eased to 4.9% from 5.1% in 2024.
Resurgent ringgit
The ringgit has been on a tear over the past year, rising almost 10% against the greenback and ending 2025 as Asia’s best-performing currency.
The ringgit is on course to beat its Asian peers for a second straight year, and some strategists are expecting the outperformance to extend into 2026, according to an earlier Bloomberg report.
The country’s deep linkages to the global tech supply chain, positive growth prospects, and the government’s continued push on fiscal consolidation bode well for the ringgit, the strategists noted.
It said Goldman Sachs Group Inc is forecasting the currency to strengthen to 3.95, which would be the highest in seven years.
“According to our FX valuation models, the ringgit is significantly undervalued,” Goldman Sachs strategists wrote in a note.
The ringgit looks set to extend gains in 2026, underpinned by robust tech exports on surging artificial intelligence (AI) demand and rising foreign direct investment flows, especially into data centres, according to an FX strategist at the Bank of Singapore.
The ringgit’s resurgence is in stark contrast to the dark days of early 2024 when the currency touched 4.80 against the US dollar, its weakest level since January 1998 during the height of the Asian Financial Crisis.
The dire situation then prompted BNM to issue a clarion call to GLCs and government-linked investment companies to repatriate their foreign earnings to ease pressure on the ringgit.
The ringgit’s turnaround from a laggard to a leader since then has been nothing short of remarkable. - FMT
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.