Kenanga Research has revised its end-2026 ringgit forecast to RM4.00 against the US dollar from RM3.95 previously, as renewed US dollar strength, elevated Treasury yields and geopolitical uncertainty continue to limit near-term gains for the local currency.
The ringgit weakened to RM4.085 against the US dollar on Thursday, from RM4.074 last Friday, as the greenback strengthened and the US Dollar Index moved back above 102.
Kenanga said stalled US-Iran negotiations and a jump in Brent crude oil prices to around US$109 a barrel intraday contributed to the global bond sell-off and weighed on higher-beta Asian currencies. Recent reporting has also pointed to continuing difficulties in US-Iran negotiations over proposals involving the Strait of Hormuz.
At the same time, stronger US activity indicators have reinforced expectations that the Federal Reserve could tighten monetary policy further, even as softer inflation and labour-market indicators have reduced expectations of an immediate October increase.
Kenanga now expects one more 25-basis-point Fed rate hike in the fourth quarter of 2026, with the timing dependent on upcoming inflation and labour-market data as well as geopolitical developments.
The research house said Malaysia’s current-account surplus, continued bond inflows and expectations of a potentially more hawkish Bank Negara Malaysia stance should provide some support to the ringgit.
However, investors are likely to remain cautious about adding fresh ringgit positions until expectations for US interest rates peak.
Kenanga expects the ringgit to trade between RM4.07 and RM4.09 against the US dollar over the coming week, adding that any move in USD/MYR towards RM4.09 could attract selective ringgit buying.
Its technical view remains neutral, with USD/MYR hovering around its five-day exponential moving average at RM4.084. Immediate support is seen at RM4.083, while resistance stands at RM4.090.
The Kenanga report was written ahead of the latest US September payrolls release. Subsequent data showed nonfarm payrolls increased by just 29,000, below the 90,000 consensus cited in the report, while unemployment edged up to 4.2%. The weaker figures subsequently reduced expectations of an October Fed hike, although a December move remains under consideration by markets.
