RINGGIT POISED TO EXTEND GAINS NEXT WEEK ON SOLID FUNDAMENTALS

By Fatin Umairah Abdul Hamid

KUALA LUMPUR, Jan 3 (Bernama) -- The ringgit is expected to continue strengthening against the US dollar next week, supported by favourable interest rate differentials and stronger domestic economic fundamentals.

Although it ended the week slightly lower against the greenback at 4.0515/0560 compared with 4.0470/0535 last Friday, the outlook remains positive, with the local currency projected to appreciate to 3.95 by year-end.

MBSB Investment Bank Bhd (IB) said in a research note that the ringgit would mostly average at 4.00 to the US dollar this year.

It said the local currency would be supported by expectations that the interest rate differential between the overnight policy rate (OPR) and the US Federal Funds rate will continue to narrow throughout the year.

“However, the pace of the ringgit’s appreciation in 2026 will remain sensitive to the US Federal Reserve’s policy trajectory. Persistent US inflation and global geopolitical risks could delay US rate cuts, acting as key constraints on the ringgit’s near-term strength,” it said.

This positive trajectory is supported by resilient domestic fundamentals, it added.

“The resilience of the ringgit is underpinned by the stability of the nation’s monetary policy settings, supported by sustained economic growth, unlike other central banks that have adopted a more dovish stance and recently eased policy interest rates to spur growth,” MBSB IB added.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid highlighted the ringgit’s stellar performance in 2025, noting that it closed higher and emerged as one of the best-performing currencies in Asia.

“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 local note traded higher against a basket of major currencies.

It strengthened against the Japanese yen to 2.5817/5848 from 2.5866/5909 a week earlier, improved vis-a-vis the British pound to 5.4509/4569 from 5.4570/4657, and appreciated versus the euro to 4.7488/7540 from 4.7629/7706 previously.

The ringgit traded mixed against its ASEAN peers.

The local currency gained versus the Thai baht to 12.8996/9201 from 13.0212/0484 a week ago, advanced against the Philippine peso to 6.88/6.89 from 6.89/6.90, declined against the Singapore dollar to 3.1502/1540 from 3.1497/1550, and depreciated against the Indonesian rupiah to 242.2/242.6 from 241.6/242.2 previously.

-- BERNAMA