Economists raise Malaysian ringgit forecast after recent rally

KUALA LUMPUR, Nov. 14 (Xinhua) -- Economists raised the Malaysian ringgit forecast after the currency reached a four-year high against the U.S. dollar.

According to the Malaysian Central Bank, the Malaysian ringgit rose to 4.13 against the U.S. dollar on Thursday from 4.18 last Friday.

CIMB said in a recent note that it is revising its near-term targets for the dollar-ringgit rate to reflect the recent bout of seasonal strength, positioning for a re-test of the 4.05-4.10 range through January 2026.

However, it expects the pair to revert to a central tendency (4.10-4.20) around fair value (4.15) in 2026.

"Seasonal patterns suggest Malaysian ringgit gains have legs in December before a pause," CIMB noted.

According to the research house, the recent rally of the ringgit is being fueled by a combination of regional rotation, powerful seasonal factors, and robust domestic capital flows.

For instance, the Malaysian ringgit is benefiting from reliable seasonal strength historically observed in November and December.

This period sees a surge in year-end export conversions, dividend repatriations, and portfolio rebalancing, which tends to boost the Malaysian ringgit before diminishing in the new year.

Fundamentally, the rally is also supported by improving national finances, added CIMB.

The country's balance of payments has shown resilience, notably with a strong rebound in the third-quarter trade data.

Net portfolio investment income has turned positive for the first time since the third quarter of 2000.

Kenanga Research also said in its recent note that it maintained its view of three additional Federal Reserve cuts over the next year, given lingering weakness in the U.S. labor market.

It noted that sustained foreign inflows, coupled with potential repatriation of foreign earnings should continue to support the ringgit.

Maybank Investment Bank also foresees that the 4.10 level of the ringgit against the U.S. dollar is in sight before the end of the fourth quarter of 2025.

According to the research house, positive developments, including steps taken towards greater fiscal prudence and the investment upcycle drivers, suggest that optimism for the ringgit is well grounded in fundamentals. Enditem