Malaysia’s ringgit is poised to strengthen next year, with Bank Muamalat Malaysia Bhd projecting the currency to reach RM4.05-RM4.10 against the US dollar by end-2026, according to chief economist Dr Mohd Afzanizam Abdul Rashid.
Mohd Afzanizam shared with BusinessToday that the main driver for the trajectory would be the expected US interest rate easing, as the Federal Reserve (Fed) likely adjusts policy rates toward a neutral 3%, potentially cutting rates two to three times next year.
“A softer US dollar would provide a tailwind for the ringgit,” he said.
Furthermore, he highlighted that Malaysia’s improved fiscal position will also supports the outlook.
“The federal budget deficit narrowed from 4.1% of GDP in the first nine month of 2024 (9M24) to 3.3% in 9M25, driven by higher tax revenue and reduced subsidies.
“This has attracted foreign capital, with net foreign inflows into Malaysian Government Securities rising to RM15.7 billion in 11M25 compared to RM1.8 billion in 2024. Net inflows from abroad also rose to RM3.3 billion versus RM2.3 billion a year earlier,” Mohd Afzanizam said, while noting that these inflows create strong demand for the ringgit and underpin its expected appreciation.
Nevertheless, he emphasised that the main risk remains with the Fed as a more hawkish stance could temper the pace of gains.
Overall, Mohd Afzanizam said the ringgit’s 2026 trajectory appears upward but cautious, balancing external monetary policy shifts with Malaysia’s stronger fiscal fundamentals and foreign investor confidence.
