Malaysian ringgit poised to strengthen, supported by oil prices and AI demand

Traders Union
All News
Financial News
Malaysian ringgit poised to strengthen

Highlights

MUFG Bank and Sumitomo Mitsui Banking Corp expect the ringgit to strengthen to around 4.0–4.03 against the U.S. dollar by the end of 2024 following a macro recovery.
Malaysia's export surge was driven by electronic products, including semiconductors, recording growth of more than 35% in the five months through August and an average forecast of 6.7% in 2025.
Malaysia is now among the world's four largest net AI exporters, with the electronics trade surplus and oil prices supporting inflows into the bond market and ringgit appreciation.

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

Strengthening forecast by year-end

As reported by The Edge Malaysia, several strategists expect the ringgit to resume its gains as the macro environment becomes more stable and external support factors improve.

MUFG Bank expects the ringgit to strengthen to 4.03 against the U.S. dollar by year-end, while Sumitomo Mitsui Banking Corp forecasts 4.0. The ringgit closed 0.3% higher at 4.0738 against the U.S. dollar on Friday, although it had weakened 1.2% throughout September and underperformed all other Asian currencies.

Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking Corp in Singapore, said the ringgit could see a relief rally by year-end as concerns over the macro environment gradually ease. According to him, Malaysia's overall fundamentals remain positive, supported by energy and electronics exports as well as stronger links with the Chinese yuan.

Energy and electronics exports drive growth

The rebound in oil prices could boost revenues for Malaysia as an energy exporter, while the country's growing role in the AI supply chain provides exposure to rising semiconductor demand. Malaysia's exports surged more than 35% in each of the five months through August, driven by shipments of electronic products including semiconductors, while export growth in 2025 averaged around 6.7%.

The International Monetary Fund stated that Malaysia is now one of the world's four largest net exporters of AI-related hardware, alongside South Korea, Taiwan and Thailand. Lloyd Chan, a foreign exchange strategist at MUFG in Singapore, said Malaysia's electronics trade surplus helps offset higher oil import bills, adding that sovereign bond and ringgit valuations remain attractive.

According to Bank for International Settlements data, the ringgit's real effective exchange rate is around 2% below its 20-year average, and continued inflows into the bond market could further support the currency. Investors are now watching Malaysia's S&P manufacturing PMI reading for September, due on Thursday, for further signs of economic expansion, as the region continues to face spillover effects from West Asia. In a note dated 18 Sept, Goldman Sachs Group Inc said Malaysia is best positioned to benefit from AI investment and higher energy prices, noting that the central bank's slightly more hawkish stance creates conditions for the ringgit to outperform.

The AI investment boom in the U.S. was previously reported by us as a driver of major demand for chips, hardware and electricity through the construction of mega-scale data centres. This surge not only supports the technology and energy infrastructure sectors, but could also add price pressures for consumers and complicate efforts to curb inflation and steer interest rates. At the same time, AI beneficiaries extend beyond chipmakers as capital flows into power grids and utilities supporting the data centre ecosystem.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.