Malaysia’s currency has become the strongest performing in Asia this year, but analysts are warning that its rapid growth may not last.
According to a report by Singapore’s DBS Bank, the Malaysian ringgit (RM) has appreciated nearly 8% against the US dollar since the start of 2025.
On Nov 13, it traded at RM4.13 per USD, a level last seen nearly four years ago.
Linked closely to USD performance
DBS noted that the ringgit’s movement is strongly tied to the US Dollar Index (DXY).
Currently, the support level sits around RM4.10.
The bank added that further short-term appreciation is limited unless the DXY drops below 99.5.
They also warned that the ringgit’s value may correct slightly before the end of the year due to the fast pace of appreciation.
USD/MYR is converging with the DXY Index, which currently indicates a support level of around 4.10.
MYR bulls wishing for USD/MYR to decline further to 4.00 would also need to believe in the DXY declining further below 99.5,” it wrote.
Strong performance after ASEAN Summit
Looking at recent trends, the ringgit surged past RM4.22 after the ASEAN Summit on Oct 27.
It strengthened to RM4.18 on Oct 29, but briefly pulled back to above RM4.20 on Nov 4 when the DXY rose to 100 points.
When the DXY dropped again to 99.5 points on Nov 12, the ringgit returned to around RM4.12.
DBS stressed that the ringgit’s movement is more aligned with the direction of the DXY rather than the size of its fluctuations.
Overall, the MYR is moving our way, but perhaps too fast. We maintain our end-of-year USD/MYR forecast at 4.17.
BNM keeps interest rate unchanged
Meanwhile, Bank Negara Malaysia (BNM) decided to keep its benchmark interest rate unchanged during its final monetary policy meeting of the year.
The central bank expressed confidence in the country’s economic growth. Preliminary data shows the economy expanded by 5.2% in the third quarter of 2025, which is higher than expected.
Inflation during the same period remained below 2%, indicating a stable price environment.
