MUFG’s Senior Currency Analyst Lloyd Chan expects USD/MYR to keep trending lower, targeting 3.7000 by end‑2026 as a more durable Ringgit appreciation cycle develops. The view is underpinned by Malaysia’s ICT‑driven investment upcycle, macroeconomic stability, and neutral BNM policy with steady foreign bond inflows. External support from firmer commodities, electronics demand and CNY resilience is highlighted, alongside clear downside risk scenarios.

Ringgit outlook supported by fundamentals

"We expect USDMYR to continue trending lower toward 3.7000 by end‑2026, supported by a more durable ringgit appreciation cycle driven by structural fundamentals."

"Malaysia’s economy remains in an ICT‑led investment upcycle, with total investment approvals across the manufacturing and services sectors rising 14.7%yoy in 9M25. Notably, ICT has emerged as the largest contributor to approved investments, underpinned by strong foreign participation, with ICT investment approvals growing by around 32%yoy over the same period."

"Macroeconomic stability also compresses risk premiums. Inflation remains well‑contained despite RON95 fuel subsidy rationalisation and adjustments to sales and services tax, allowing BNM to maintain policy stability. Fiscal discipline keeps sovereign risks in check, supporting investor confidence in local financial markets."

"We expect BNM to maintain a neutral policy stance, keeping the policy rate at 2.75% through 2026, while further Fed easing should continue to narrow rate differentials. This will enhance Malaysia’s relative yield appeal and has already helped drive a steady pickup in net foreign bond inflows since 2024."

"Downside risks to our ringgit outlook include a sharp global growth slowdown, a significant decline in commodity prices, or a downturn in the global electronics cycle."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)