Shah Alam: The Malaysian ringgit has outpaced global currencies to become the best-performing currency against the US dollar, according to Lloyd Chan, senior analyst at MUFG Bank.
Bloomberg data shows the ringgit has surged by 14.35% over the last three months, surpassing even gold, which rose by 14.2% during the same period. The analysis covers the period from June 27 to September 27.
Chan attributes the ringgit’s strong rebound to Malaysia’s robust economic growth and the ongoing interest rate easing by the US Federal Reserve. Market expectations for further rate cuts in the US since July have fueled the ringgit’s rapid rise in the second half of 2024. With the ringgit undervalued in the early months of the year, the currency had significant room for appreciation, Chan explained to FMT.
In addition to the ringgit, the Thai baht also performed strongly, boosted by Thailand’s economic recovery, a resurgence in tourism, and rising gold prices. The baht appreciated by 13.79%, ranking third, while the Japanese yen followed with a 13.04% rise.
Looking ahead, Chan believes the ringgit could reach a five-year high of RM4 to the US dollar by the end of the year, provided market sentiment remains favorable towards Asian currencies and the US Federal Reserve implements a projected 50 basis point interest rate cut. However, he cautioned that the upcoming US presidential election could introduce some volatility.
On September 27, BMI Country Risk & Industry Research, a unit of Fitch Solutions, revised its forecast for the ringgit to end 2024 at RM4 per US dollar, up from its previous estimate of RM4.55. BMI also predicted a 9% rise in the ringgit in 2025, potentially reaching RM3.55 per US dollar by the end of that year.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid expects strong demand for the ringgit to continue. He highlighted that HSBC recently upgraded Malaysia’s rating from underweight to neutral, signaling increased optimism among global banks regarding Malaysia’s economic outlook.
Bloomberg earlier reported that the ringgit experienced its strongest quarterly performance since 1973. Yesterday, the ringgit closed at RM4.12 to the US dollar, rebounding from its near two-decade low of RM4.81 in February 2024.
Analysts suggest the ringgit’s upward trajectory could continue through the year, supported by narrowing interest rate differentials between the US and Malaysia and improving trade performance.
