MUFG’s Lloyd Chan has highlighted a positive outlook for the Malaysian Ringgit (MYR) against the US Dollar (USD), noting that the USD/MYR pair has recently broken lower, signaling a constructive trend for the Ringgit. Chan expects the Ringgit's appreciation to be supported by Malaysia's robust macroeconomic fundamentals over the next 12 months, despite ongoing risks in the Middle East [1].
Key factors underpinning the Ringgit's strength include Malaysia's position as an oil producer and net gas exporter, contained MYR volatility, stable economic growth, and an anchored trade surplus driven by electronics exports and steady terms of trade. Chan forecasts Malaysia's growth to remain at a potential output of 4.8% in 2026, with inflation relatively contained and Bank Negara Malaysia (BNM) likely to keep its policy rate steady at 2.75% [1]. Foreign bond holdings are described as stable, with central banks and governments now the largest foreign holders of local government bonds [1].
MYR volatility has been contained, with the initial rise in Ringgit volatility being modest compared to the Philippine Peso (PHP) and Thai Baht (THB), and volatility has since fallen below pre-conflict levels. This underscores the Ringgit's lower relative vulnerability in the region [1].
While near-term volatility is expected, MUFG maintains a constructive stance on the Ringgit, citing macro fundamentals and capital flows as supportive factors for continued appreciation over the next year [1].
CONCLUSION
MUFG projects a constructive outlook for the Malaysian Ringgit, supported by strong macroeconomic fundamentals and stable capital flows. Despite some near-term volatility, the Ringgit is expected to appreciate against the US Dollar over the next 12 months. Market sentiment is positive, with Malaysia's economic stability and trade surplus anchoring the currency's strength.