HSBC expects the ringgit to weaken through 2027, with a gold recovery potentially following

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HSBC expects the ringgit to weaken

Highlights

HSBC expects the Malaysian ringgit to weaken through 2027, trading in a range of 4.10–4.20 against the U.S. dollar, pressured by a widening interest rate differential.
HSBC forecasts gold prices to recover in 2027 as central banks approach the end of their interest rate hiking cycles.
Malaysia’s economy grew 5.3% in the third quarter, driven by the manufacturing and services sectors, exceeding market expectations.

This article was translated from the original. Read the original version by our correspondent here.

Ringgit forecasts and interest rate outlook

As reported by The Edge Malaysia, HSBC expects the Malaysian ringgit to weaken in 2027 as a resilient U.S. dollar and a widening interest rate differential continue to weigh on the local currency. The bank forecasts the ringgit trading in a range of 4.10 to 4.20 against the U.S. dollar, with the local currency potentially moving towards the upper end of that range or weakening slightly further by the end of 2026.

HSBC’s head of Asia FX research, Joey Chew, said the dollar still had the upper hand, pointing to an increase in political headlines in Malaysia ahead of the election that could make some global investors more cautious. On Monday, the ringgit traded at around 4.07 against the U.S. dollar, pressured by higher U.S. interest rates and global bond yields.

Even so, she said the ringgit continued to outperform other Southeast Asian currencies, supported by Malaysia’s strong growth. However, the gap between U.S. and Malaysian interest rates could prompt investors to seek higher returns overseas, limiting the ringgit’s potential to strengthen.

Impact on gold markets and Malaysia’s economic environment

HSBC also expects gold prices to recover in 2027 as central banks approach the end of their interest rate hiking cycles. Gold had previously underperformed as higher oil prices fueled inflation concerns and prompted central banks to raise rates, making non-yielding assets such as gold less attractive.

Chew said that central banks were expected to hold rates at elevated levels next year without raising them further, a situation that HSBC said could pave the way for a recovery in gold. Domestically, Malaysia’s economy grew 5.3% in the third quarter, faster than expected, driven by growth in the manufacturing and services sectors.

The briefing coincided with HSBC Malaysia’s launch of its upgraded FX on Mobile service, which allows customers to track currency movements, set exchange rate alerts and convert currencies through the mobile banking app. The move reflects the bank’s continued focus on foreign exchange management needs amid persistently high market volatility.

In our earlier report on FBM weakness KLCI, Malaysia’s stock market traded lower as concerns about U.S. inflation and the prospect of higher interest rates weighed on investor sentiment. We also highlighted continued foreign selling pressure and weakness in technology and semiconductor stocks, as investors remained cautious ahead of the next U.S. economic data release.

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