Ringgit seen strengthening to 4.10 against US dollar within a year

KUALA LUMPUR: The ringgit is poised to strengthen to 4.1000 against the dollar in the next 12 months.

This will be buoyed by a steady inflation outlook, a narrowing interest rate gap between Malaysia and the US as well as a boost in economic growth.

Hong Leong Bank Bhd fixed income and economic research general manager Choong Yin Pheng said the 2026 Budget will have a "mildly positive" impact on the local currency.

"The ringgit has been trending rather range bound over the last few months, within the 4.18 to 4.25 level. Going forward, the budget will be mildly positive for the rate and we are looking at the level of 4.2000 by the end of the year.

"Over the course of the next 12 months, we are looking at 4.1000 for the ringgit against the dollar," she said during the 2026 Budget round table discussion held by Hong Leong Bank.

The US Federal Reserve (Fed) easing cycle and Bank Negara Malaysia's steady policy stance are also expected to provide continued support for the ringgit in the near term.

She added that the dollar is expected to weaken as the Fed continues to lower interest rates while other central banks have ended or are coming to an end of its policy easing cycle.

"We are forecasting a weaker dollar index moving forward," Choong said.

Meanwhile, the bank expects the economy to grow between 4.0 and 4.5 per cent range for 2026, in line with the government's forecast.

It also expects inflation to hover around two per cent and anticipates the overnight policy rate to remain at 2.75 per cent through 2026.

Chief executive officer and managing director Kevin Lam commended the government's commitment to sound fiscal management and growth-oriented reforms.

"The 2026 Budget reflects the government's continued discipline in balancing growth with fiscal sustainability.

"We are encouraged by the focus on strengthening Malaysia's economic foundation through strategic revenue measures, expenditure rationalisation, and targeted subsidy reforms.

"These steps support the nation's long-term resilience but also create a more stable environment for businesses and investors," he said in his opening remarks.

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