Ringgit Emerges as the World’s Best-Performing Currency
Shah Alam: The Malaysian ringgit has claimed the title of the world’s best-performing currency against the US dollar, according to Lloyd Chan, senior analyst at MUFG Bank.
Bloomberg data shows that the ringgit has appreciated by 14.35% against the US dollar in the last three months, surpassing gold, which saw a 14.2% increase in value during the same period. The analysis spans from June 27 to September 27, positioning the ringgit ahead of other global assets.
Chan attributes this strong recovery to Malaysia’s sustained economic growth and the ongoing easing cycle by the US Federal Reserve. Market expectations of continued interest rate cuts in the US since July have fueled the ringgit’s sharp rise, particularly in the second half of this year. The relatively undervalued ringgit at the start of the year also set the stage for its recent appreciation, Chan told FMT.
Other currencies in the region also performed well, with the Thai baht appreciating by 13.79% against the US dollar, driven by the country’s economic recovery, especially in the tourism sector, and rising gold prices. The Japanese yen followed closely with a 13.04% gain.
Looking ahead, Chan suggested that the ringgit could strengthen further to reach a five-year high of RM4 to the US dollar by the end of 2024, provided market sentiment remains favorable toward Asian currencies and the US Federal Reserve slashes interest rates by 50 basis points. However, Chan warned that the upcoming US presidential election could introduce volatility to the market.
On September 27, BMI Country Risk & Industry Research, a division of Fitch Solutions, revised its end-2024 forecast for the ringgit to RM4 per US dollar, from a previous estimate of RM4.55. BMI also projects that the ringgit will strengthen by 9% in 2025, potentially reaching RM3.55 by the end of that year.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid remains optimistic, expecting demand for the ringgit to stay strong. He pointed out that HSBC has recently upgraded Malaysia’s rating from underweight to neutral, reflecting growing confidence among foreign banks in Malaysia’s economic outlook.
Earlier this month, Bloomberg reported that the ringgit achieved its best quarterly performance since 1973. Yesterday, the ringgit closed at RM4.12 against the US dollar, bouncing back from RM4.81 in February 2024 — its second lowest value since the Asian Financial Crisis of 1997-1998. Analysts predict the ringgit may continue its rally, supported by narrowing interest rate differentials and Malaysia’s improving trade performance.