THE ringgit is set on a positive trajectory against the US dollar, underpinned by favourable interest rate differentials and strong domestic economic fundamentals, according to market analysts.
Although the local currency ended last week marginally lower at 4.0515/0560 against the greenback, compared with 4.0470/0535 the previous Friday, projections for 2026 remain optimistic.
The ringgit is expected to appreciate to around 3.95 by year-end, reflecting sustained investor confidence and a resilient domestic economy.
MBSB Investment Bank Bhd noted in a research briefing that the ringgit is likely to average around 4.00 to the US dollar over the course of the year.
“The local currency will be supported by expectations that the interest rate differential between the overnight policy rate and the US Federal Funds rate will continue to narrow throughout the year,” the bank said.
However, MBSB cautioned that the pace of appreciation will remain sensitive to US monetary policy.
“Persistent US inflation and global geopolitical risks could delay US rate cuts, acting as key constraints on the ringgit’s near-term strength,” it added.
The resilience of the Malaysian currency is further reinforced by stable domestic monetary policy, in contrast to other central banks that have adopted a more dovish stance and eased interest rates to stimulate growth.
“The resilience of the ringgit is underpinned by the stability of the nation’s monetary policy settings, supported by sustained economic growth,” MBSB explained.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid highlighted the ringgit’s exceptional performance in 2025, noting that it ended the year as one of Asia’s best-performing currencies.
“In 2026, it will be a whole new year, with the Malaysian economy in a position of strength to navigate external challenges. This should translate into sustained appreciation of the ringgit against the US dollar,” he told Bernama.
The ringgit also recorded gains against a basket of major currencies. It strengthened against the Japanese yen to 2.5817/5848 from 2.5866/5909 a week earlier, improved versus the British pound to 5.4509/4569 from 5.4570/4657, and appreciated against the euro to 4.7488/7540 from 4.7629/7706.
Against regional currencies, the ringgit gained against the Thai baht to 12.8996/9201 from 13.0212/0484 and rose versus the Philippine peso to 6.88/6.89 from 6.89/6.90, but weakened against the Singapore dollar to 3.1502/1540 from 3.1497/1550 and slipped versus the Indonesian rupiah to 242.2/242.6 from 241.6/242.2.
Analysts say that while short-term fluctuations are possible, the underlying strength of Malaysia’s economy, coupled with careful monetary policy, is likely to keep the ringgit on an upward path throughout 2026. - January 3, 2025
