Two tailwinds are lining up: pricier crude that can lift an energy exporter's revenues, and Malaysia's deeper integration into the AI supply chain that ties it to stronger semiconductor demand. With the extra political risk premium from some state elections receding, several strategists expect the currency to get back on the front foot.
"Malaysia has been on the right side of the terms-of-trade story throughout the year," Goldman Sachs strategists including Danny Suwanapruti wrote on Sept. 18, adding that "the conditions are in place for ringgit to outperform." They also highlighted a slightly more hawkish central bank and recommended a long ringgit/baht trade.
The ringgit lagged its Asian peers with a 1.2% drop in September, but it finished Friday 0.3% stronger at 4.0738 per dollar. MUFG Bank expects the currency to appreciate to 4.03 per dollar by year end, while Sumitomo Mitsui Banking Corp. projects 4.0.
Jeff Ng, the Singapore-based head of macro strategy for Asia at Sumitomo Mitsui Banking Corp., said, "We could see a relief rally in the ringgit toward the year-end as macro environment concerns ease." "Malaysia's overall fundamentals are still positive," he said, pointing to energy and electronics exports and links to a firmer yuan. Lloyd Chan, a foreign exchange strategist at MUFG in Singapore, said "We see scope for ringgit strength," citing appealing sovereign bond and ringgit valuations.
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Outbound shipments rose more than 35% in every one of the five months through August, helped by electronics, including semiconductors. The average pace for 2025 was about 6.7%.
Chan noted that Malaysia's surplus in electronics trade has helped counterbalance a higher oil import bill. The real effective exchange rate sits roughly 2% below its 20‑year average, based on Bank for International Settlements data, and additional bond inflows could give the currency another lift. Investors will be eyeing Thursday's S&P Malaysia manufacturing PMI for September for more signs of expansion as the region navigates fallout from the Middle East. As one of the top global exporters of liquefied natural gas, Malaysia may also be better positioned than some peers to absorb higher energy costs.
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