PETALING JAYA: Malaysia’s ringgit faces a challenging path to 2025, with a mix of global headwinds and domestic opportunities shaping its outlook, while the continued strength of the US dollar, rising US Treasury yields and trade-related weaknesses. Due to this the currency remains under pressure.
Saktiandi Supat, head of foreign exchange research at Maybank, said the ringgit’s recovery depends on two key factors – continued investment momentum and the eventual stabilization of the US dollar.
“Malaysia’s domestic investment cycle, particularly initiatives such as the Johor-Singapore Special Economic Zone, are expected to boost sentiment towards the ringgit. These projects are generating optimism for long-term economic growth, as well as the government’s commitment and support towards fiscal consolidation.
“The possibility of narrowing the budget deficit and a positive sovereign rating revision could help strengthen investor confidence, which will provide a counterbalance to external pressures,” he said at the Maybank Investment Bank 2025 Outlook virtual media briefing on Tuesday.
However, Saktiandi said Malaysia’s high export exposure to China remains a double-edged sword.
“The sensitivity of the ringgit to RMB (renminbi) movements is well documented, with estimates that for every 1% move in the RMB there is a 0.6% to 0.7% impact on the ringgit. This vulnerability is heightened by the ongoing weakness of the RMB, which is projected to weaken further against the dollar in 2025. As Malaysia’s second-largest export market, China’s economic trajectory will remain a key factor in shaping the performance of the ringgit,” he said.
Saktiandi said the broader strength of the US dollar poses another significant challenge, predicting that the ringgit-dollar exchange rate will reach RM4.70 by mid-2025 and ease to around RM4.45 by the end of the year. Will go.
“This trajectory reflects global market dynamics, including higher US Treasury yields and the Federal Reserve’s cautious stance on interest rates. “The strengthening of the dollar is expected to remain a major theme in the second and third quarters of 2025, putting downward pressure on the ringgit.”
Saktiandi said Bank Negara Malaysia’s policy stability could provide some relief amid these headwinds. With the central bank holding its policy rate on hold and refraining from aggressive easing, Malaysia’s yield differential against regional peers may remain relatively stable.
“This stability is expected to limit the extent of ringgit depreciation, even if high-yield currencies such as the Indonesian rupiah and the Philippine peso face rate cut risks.”
Saktiandi said that while the ringgit faces undeniable external challenges, Malaysia’s improving fiscal position and strong investment narrative offer a foundation for resilience.
“The interplay between global macroeconomic forces and domestic policy measures will determine whether the currency can meaningfully recover in the second half of 2025. For now, market participants are keeping a close eye on the twin forces of investment pick-up and dollar stabilization as key drivers. For the way forward for the ringgit,” he said.
