Ringgit Shows Positive Trajectory Backed by Economic Strength
The ringgit is demonstrating a positive outlook, reflecting Malaysia’s strong economic fundamentals and promising growth prospects for the next several years, according to Bank Negara Malaysia (BNM) Governor Datuk Seri Abdul Rasheed Ghaffour.
Speaking at the Malaysia Economic Forum (FEM) 2025, the governor emphasized that the ringgit is poised for continued support due to narrowing interest rate differentials with global economies, particularly the United States, and improved investor sentiment.
Key Factors Supporting the Ringgit
- Narrowing Interest Rate Differentials
- The ringgit began regaining strength in July last year as the US Federal Reserve started cutting interest rates.
- This reduced the rate gap between the US and Malaysia, bolstering the ringgit’s position.
- Investor Confidence
- Government roadshows have fostered positive investment sentiment, further supporting the ringgit.
- The growing optimism is driven by Malaysia’s strong economic fundamentals and ongoing structural reforms.
- Coordinated Market Actions
- BNM and the government have implemented coordinated measures to ensure a balanced and active forex market.
- Average daily forex trading volume in the onshore market has risen to US$18 billion (RM4.50 per USD) in 2025, compared to US$15 billion in 2023.
Challenges and Volatility Ahead
Despite the progress, Governor Abdul Rasheed cautioned about potential near-term volatility.
- Market uncertainty may arise from the transition to a new US administration later this month.
- External global economic conditions continue to impact exchange rate stability.
Malaysia’s Structural Reforms: A Long-Term Boost
Abdul Rasheed highlighted that the government’s structural reform initiatives will provide enduring support for the ringgit. These reforms are designed to enhance Malaysia’s economic resilience, making it an attractive destination for foreign direct investment (FDI) and fostering long-term economic stability.
Outlook for the Ringgit
The governor expressed optimism that the ringgit will remain supported by:
- Robust economic fundamentals.
- Sustained investor interest due to policy clarity and reforms.
- Strengthened market participation through two-way flows in the forex market.
The Malaysian government’s collaborative approach with BNM is proving effective in reinforcing the ringgit’s resilience, even amid global uncertainties.
With narrowing rate differentials, improved investment sentiment, and progressive structural reforms, the ringgit is on a solid path toward long-term stability and growth.
