THE ringgit is expected to appreciate further against the US dollar in the coming months, with economists and strategists pointing to growing fiscal concerns in the United States and strengthening economic fundamentals at home.
Currently trading at around RM4.22 to the greenback, the national currency is forecast to reach between RM4.15 and RM4.20 by the end of 2025, and between RM4.10 and RM4.15 in 2026, according to Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid.
“I believe there is a chance that the ringgit could gain further momentum against the US dollar,” he said, citing Moody’s Ratings’ downgrade of the US government’s sovereign credit rating in May.
Moody’s lowered the US’ long-term issuer and senior unsecured rating to AA1 from AAA on 16 May, attributing the move to mounting debt and rising interest payments.
It marked the third and final of the major credit rating agencies to cut the US’ top-tier rating, following similar moves by Standard & Poor’s in 2011 and Fitch Ratings in 2023.
Moody’s warned that “without adjustments to taxation and spending, the US budget flexibility remains limited, with mandatory spending, including interest expense, projected to rise to around 78% of total spending by 2035 from about 73% in 2024.”
Afzanizam noted that such fiscal vulnerabilities, coupled with current US economic policies, may dampen the dollar’s traditional safe-haven status.
“By extension, this could undermine the status of the US dollar as the safe haven currency, with the present administration seeming to be antagonistic towards its allies and the global community,” he said, highlighting policy measures such as “import tariffs and sizeable tax cuts” as key contributors to US fiscal stress.
OCBC Bank currency strategist Christopher Wong observed that the ringgit has already appreciated approximately 5% against the US dollar since April, in tandem with other regional currencies.
“We project the US dollar and ringgit pair to head lower towards 4.20 for the third quarter and 4.16 for the fourth quarter of 2025,” The Star cited him saying.
Wong cited robust foreign direct investment, continued foreign fund inflows, a current account surplus and the government’s fiscal consolidation efforts as key tailwinds for the currency.
He added that a weakening dollar trend is expected to continue as the US Federal Reserve resumes its rate-cutting cycle.
Meanwhile, a more stable Chinese economy and improving sentiment around Chinese assets, including the yuan, could bolster the ringgit through trade and investment channels.
“There is also room for the ringgit to gain further or for foreign fund inflows to Malaysia to accelerate, should US dollar diversification flows resume in a big way,” Wong added. - August 19, 2025
