KUALA LUMPUR: The ringgit could hold its resilience and trade around 4.27 against the US dollar this year if the United States Federal Reserve refrains from sharp rate cuts.
AmBank (M) Bhd chief economist Firdaos Rosli said the local note was among the top-performing currencies in the first half of 2025, and the positive momentum is expected to persist.
He said the year-end forecast of 4.27 reflects expectations of a mild rebound in US dollar strength and softer support from Malaysia’s trade account.
In the near term, Firdaos expects the ringgit to trade within the 4.20–4.25 band, largely influenced by US dollar-driven factors.
This outlook comes despite limited market reaction to recent developments, including the US tariff deal, the potential semiconductor tariff threat, and Bank Negara Malaysia’s downward revision of Malaysia’s growth outlook.
“Malaysia’s stable monetary policy, coupled with minimal surprises on the domestic fiscal or political front, supports a steady outlook for the ringgit,” he said at AmBank’s macroeconomic outlook briefing here today.
He added that robust foreign exchange trading volumes, seen when the US dollar/ringgit briefly dipped below 4.20 during intraday trade on Aug 14, further reinforced AmBank’s conviction of a narrow trading range in the near term.
He noted that the US dollar/ringgit traded within two distinct bands in the first half of 2025, initially between 4.40 and 4.50 before strengthening to the 4.20–4.30 range from May onwards.
Firdaos anticipates further appreciation of the ringgit in the first half of 2026, driven by greater clarity on the Fed’s rate trajectory, improved regional equity sentiment, and a narrowing short-term rate differential that could spur more US dollar conversions into the ringgit.
“The effect may be tempered if potential semiconductor tariffs erode Malaysia’s strong current account surplus. However, Bank Negara’s larger foreign reserves in 2025 may help cushion the impact,” he added.
Firdaos highlighted upside risks to the forecast, including a sharp escalation in US-China tensions, faster-than-expected US inflation, or a more hawkish stance by the incoming Federal Reserve chairman, whose appointment is still pending.
He added further weakness in the US labour market, renewed concerns over US fiscal health, or questions about the Fed’s independence could trigger a broad-based rally in Asian currencies against the dollar.
© New Straits Times Press (M) Bhd
