KUALA LUMPUR, Aug 29 — The ringgit is projected to settle at 4.27 against the US dollar by the end of 2025, on a slight rebound in US dollar strength and reduced support from Malaysia’s trade account.
However, AmBank Group chief economist Firdaos Rosli noted that the trading range for the next few months will remain largely confined within the 4.20-4.25 level, driven mainly by US dollar-centric developments.
He said there has been little reaction to significant developments over the past few weeks, such as the US tariff deal and semiconductor tariff threat, and Bank Negara Malaysia’s downward revision of Malaysia's growth estimate.
“We believe that the ringgit would be range-bound in the next couple of months and then move toward 4.27 by the end of the year,” Firdaos told the press during the bank’s media briefing on the macroeconomic outlook today.
Earlier this year, he had projected that the ringgit would likely trade sideways, with an end-of-year forecast of RM4.45 against the US dollar. The forecast has since been revised upward following the latest developments.
Firdaos said that Malaysia’s stable monetary policy settings, few surprises in the domestic fiscal and political landscapes, and strong forex trading volumes — when the USD/MYR pair temporarily fell below 4.20 during intraday trading on August 14 — further bolster the conviction of a limited trading range in the near term.
He reckons that a potential interest rate cut at the US Federal Open Market Committee meeting from September 16 to September 17 may boost the ringgit’s performance.
“We are looking at two rate cuts for the US this year, and it could start as early as September. There is also a possibility of them proceeding with a 50 basis points cut in September.
"However, if in the event that the US Federal Reserve (US Fed) chooses to hold the rates higher for longer, that could give a bit of pressure to the ringgit,” Firdaos said.
The local note’s appreciation is expected in the first half of 2026 when the outlook on the US Fed policy rate pathway becomes clearer, and sentiment on regional equities improves, while the narrowing short-term rate differential drives greater US dollar conversions into the ringgit.
The effect may be tempered if potential semiconductor tariffs diminish Malaysia's strong current account surplus. However, BNM’s increased foreign reserves in 2025 may help mitigate the impact in this scenario.
He said further signs of US labour market weakness or renewed worries on the US fiscal outlook or US Fed independence will inspire a broad-based Asian forex rally against the greenback.
