MUFG expects the ringgit to strengthen below RM4 against the U.S. dollar by the third quarter of 2027

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Ringgit expected to strengthen in 2027

Highlights

MUFG Bank expects the ringgit to strengthen to 4.03 against the U.S. dollar by the end of 2026 and 3.98 by the third quarter of 2027.
Bank Negara Malaysia is expected to keep the overnight policy rate at 2.75% until the third quarter of 2025 as inflationary pressures remain contained.
Malaysia’s services investment rose by more than 20% year on year in the first half of 2026, driven by the ICT sector, supporting exports and 6% year-on-year economic growth in the second quarter.

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

MUFG currency and interest rate forecasts

As reported by The Edge Malaysia, citing MUFG Bank, Malaysia’s currency is expected to outperform most other Asian currencies in the final quarter of 2026, even as higher oil prices continue to pressure the ringgit. The bank sees the ringgit, which traded around 4.09 against the U.S. dollar on Monday morning, strengthening to 4.03 by the end of 2026 before rising further to 3.98 by the third quarter of 2027.

MUFG also expects Bank Negara Malaysia to keep the overnight policy rate at 2.75% until the third quarter of next year, as inflationary pressures remain contained. In its latest foreign exchange outlook, the bank ranked the ringgit as the best-performing Asian currency within its coverage.

MUFG said Malaysia’s electronics trade surplus continues to help absorb oil price shocks, keeping the country’s trade position relatively resilient in a high-energy-price environment. According to the bank, higher oil prices are more likely to be a short-term headwind for the ringgit rather than undermine its medium-term outlook.

Export, investment and economic growth support

Malaysia also continues to benefit from ongoing investment in information and communications technology, including data centres and cloud computing. Services investment approvals rose by more than 20% year on year in the first half of 2026, driven largely by ICT-related investment.

MUFG said stronger U.S. spending on computers and related equipment is also supporting demand for Malaysia’s electrical and electronics exports. The bank added that the ringgit’s fundamentals remain intact despite rising oil prices and a recent bond market sell-off.

While near-term volatility may persist as investors monitor higher fuel subsidy costs and rising global bond yields, MUFG believes Malaysia’s resilient external position, improving capital flows and attractive valuations will continue to support the ringgit over the medium term. The bank also highlighted Malaysia’s stronger economic growth, with gross domestic product expanding 6% year on year in the second quarter compared with average growth of 4.9% before the pandemic.

Ahead of Budget 2027, our previous coverage focused on industry expectations that the government would provide more targeted support for the semiconductor and technology sectors—including financing, R&D incentives, automation and talent development—rather than a single large allocation. The article also explained how AI-driven demand remains strong through 2028, but industry players still face capacity constraints, long equipment lead times and a shortage of skilled workers.

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