Recent movements in Asian currencies have revealed an interesting shift in regional dynamics, with the Malaysian ringgit emerging as the strongest performer among its peers.
The ringgit recorded the highest percentage gain in the region, reflecting a growing confidence among investors in Malaysia’s economic outlook at a time when global markets remain unsettled by monetary tightening, geopolitical tensions, and volatile capital flows.
This strengthening signals more than a short-term fluctuation. The ringgit is increasingly regaining a positive narrative as an emerging market currency supported by improving macroeconomic fundamentals.
In an environment where investors are highly sensitive to risk, stability has become a scarce and valuable asset.
With an appreciation of about 0.27 percent, the ringgit outperformed the Chinese yuan, which rose by 0.23 percent, and the Thai baht, which gained 0.20 percent. These three currencies formed a small group of relative outperformers in a region otherwise marked by uneven movements.
Restoring confidence
The pattern suggests that markets are now differentiating more carefully between economies, rewarding those with clearer policy direction, healthier external balances, and more controlled growth prospects.
For Malaysia in particular, the positive sentiment is often linked to the gradual recovery in exports, clearer fiscal discipline, and expectations that domestic interest rates remain supportive of currency stability without choking economic growth.
The combination of external improvement and internal policy clarity has helped restore confidence that had been shaken in earlier years.
This improvement is also closely linked to the political context. Under Prime Minister Anwar Ibrahim, several difficult and often unpopular policy decisions were taken in the interest of long-term stability rather than short-term approval.
Fiscal tightening, subsidy reforms, and stricter governance were not easy choices, but they sent a clear signal of discipline to investors.
Quick measures rarely create currency strength. It is built slowly through credibility, consistency, and the willingness to accept short-term costs for long-term progress.
Markets are now more selective
By contrast, the sharp weakening of currencies such as the South Korean won, the Japanese yen, and the Indonesian rupiah reflects very different structural and cyclical pressures.
The won and yen remain highly sensitive to growth concerns, interest rate gaps with the United States, and heavy exposure to capital outflows. The rupiah continues to face pressure from external sentiment and financing needs linked to its fiscal position.
These divergences underline a broader reality. Asian currency performance is no longer driven by regional sentiment alone.
Markets are now far more selective, assessing each economy on its own fundamentals rather than treating the region as a single risk block. Stability, policy credibility, and institutional strength are increasingly decisive.
For Malaysia, a stronger ringgit offers clear benefits. It helps contain imported inflation, stabilises corporate balance sheets, and strengthens investor confidence. At the same time, it places a responsibility on policymakers to maintain discipline.
Currency gains can be fragile if not supported by consistent policy and credible institutions.
In a global environment that remains volatile, it is macroeconomic stability, clarity of direction, and institutional credibility that will continue to determine the path of Asian currencies.
The recent performance of the ringgit suggests that markets are beginning to reward Malaysia for rebuilding those foundations, but sustaining that trust will require steady hands and patient reform. - Mkini
MAHATHIR MOHD RAIS is a former Federal Territories Bersatu and Perikatan Nasional secretary. He is now a PKR member.
The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.
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