Ringgit To See Range Bound At 4-4.20 This Year On Strong External Position

KUALA LUMPUR, Jan 20 (Bernama) -- The ringgit is expected to trade within the range of 4.0-4.20 against the US dollar this year, supported by structural improvements in Malaysia’s external accounts, although its upside remains constrained by global portfolio outflows and a stronger dollar.

Standard Chartered economist and FX analyst for Asia, Jonathan Koh said the currency outlook remains broadly constructive despite external headwinds.

“The ringgit has performed very well over the past two years, even before 2024. It is actually one of the currencies that we like the most in the whole of Asia,” he said during a media briefing on Standard Chartered's first half (1H) 2026 Global & Malaysia Outlook, here today.

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Koh said the ringgit’s resilience is underpinned by a notable turnaround in the current account, particularly the services balance, which recorded a surplus for the first time in 14 years on the back of net travel balance and a sharp improvement in construction services.

“Net travel balance has really improved beyond pre-COVID level, while the construction services balance has improved by about 0.5 per cent of gross domestic product (GDP) after the country reduced its reliance on imported construction services.

“Further support came from improvements in primary income, following Bank Negara Malaysia’s (BNM) push to encourage repatriation of overseas earnings, which has led to primary income improving by about 0.5 per cent of GDP versus pre-COVID,” he added.

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However, Koh cautioned that financial flows continue to offset these gains, with persistent portfolio outflows driven largely by global equity performance.

“You still see a lot of outflows from the portfolio side of things… there’s still a huge outflow to buy US equities,” he said.

Malaysia’s relatively low interest rate environment and potential changes to global bond index weightings could also limit foreign inflows into local debt markets, he added.

Commenting on the domestic economy, Koh said Malaysia’s economic growth is expected to moderate to around 4.5 per cent this year, still at the upper end of the government’s forecast range, supported mainly by private investment.

“Investment sentiment, both from foreign investors as well as domestic investors, continues to be very strong,” he said, adding that much of the momentum is concentrated in non-residential construction and data-centre-related investment.

Inflation, meanwhile, is expected to remain benign at about 1.7 per cent, despite subsidy rationalisation and tax changes, supporting BNM’s decision to keep monetary policy unchanged this year.

“Currently, our view is that BNM will maintain the status quo,” Koh said.

-- BERNAMA