KUALA LUMPUR, August 29, 2025 – The Malaysian ringgit looks set to retain its strength through year-end—hovering around 4.27 MYR/USD—provided the U.S. Federal Reserve avoids aggressive interest rate reductions, according to AmBank’s chief economist, Firdaos Rosli.
Speaking at AmBank’s macroeconomic outlook briefing today, Firdaos noted that the ringgit stood as one of the most resilient currencies during the first half of 2025. He anticipates it will continue to trade in a narrow band of 4.20–4.25, with upside potential later in the year if U.S. dollar momentum eases and Malaysia-specific fundamentals remain supportive.
Looking further ahead, Firdaos projects the ringgit could rally even more strongly in the first half of 2026. Key catalysts would include clearer Fed direction, buoyant regional equity sentiment, and narrowing rate differentials that could favour conversions into Malaysian ringgit.
What’s Powering the Ringgit?
Fed Policy: A Key External Influence
Global sentiment that the Fed may opt for modest or delayed rate cuts is a major tailwind. Such a scenario could reduce pressure on emerging market currencies, including the ringgit.
Strong Domestic Fundamentals
– Stable monetary policy from Bank Negara Malaysia and a predictable political and fiscal environment underpin investor confidence.
– Malaysia’s economy is making inroads through resilient current-account surpluses and growing inflows across key sectors such as electrical & electronics, renewables, and data centres.
Market Behavior and Technical Sentiment
Observers point to the 4.20 level as psychologically and technically significant. Sustained trading below this mark could signal a more enduring appreciation trend.
Risks and Upside Potential
Upside Case:
AmBank projects the ringgit could appreciate to around 4.10 by end-2025, further strengthening to approximately 4.05 in the first quarter of 2026, especially if the Fed proceeds with anticipated cuts.
Potential Headwinds Include:
– A hawkish pivot from the Fed—say, unexpected rate hikes or delay in cuts—could bolster the U.S. dollar and undermine the ringgit.
– Domestic shocks such as fiscal slippage, political uncertainty, or policy missteps could dampen investor sentiment.
Summary Table: Ringgit Outlook
| Factor | Outlook & Impact |
|---|---|
| Fed Rate Cuts | If modest or delayed → supports ringgit strength |
| Domestic Policy & Stability | Maintaining calm → bolsters long-term credibility |
| Market Sentiment & Technical Levels | Below 4.20 → signals potential appreciation |
| Risks | Fed hawkishness or domestic disruption → potential drag |
