Ringgit Seen At 4.08 By End-2025 On Reforms, Stability - Kenanga IB

KUALA LUMPUR, Sept 10 (Bernama) -- The ringgit is projected to strengthen to 4.08 against the US dollar by year end, underpinned by Malaysia’s macroeconomic stability, ongoing reforms and investor rotation out of US assets, Kenanga Investment Bank (IB) Bhd said.

In a note today, the bank said Malaysia continues to offer selective opportunities, supported by corporate earnings repatriation, despite Bank Negara Malaysia’s (BNM) July rate cut that narrowed the real yield gap and trimmed some bond appeal.

It added that foreign exchange deposits hit a record RM292.8 billion in July, while BNM’s Qualified Resident Investor programme has created stronger incentives for firms to convert holdings.

“Over the next 9–12 months, the US dollar should weaken on fiscal concerns and Federal Reserve easing, though a near-term rebound looks likely as positioning normalises.

“That offers an entry point into emerging market assets, with Malaysia standing out as a reform-driven market,” it said.

Kenanga IB said BNM is expected to maintain its monetary policy stance and preserve space for future shocks, backed by resilient domestic demand, with mining set to recover and services expanding steadily, cushioning external weakness.

“With growth steady and inflation manageable, the current policy rate at 2.75 per cent remains appropriate. A cut looks unnecessary so long as domestic demand holds, though BNM will stay data dependent,” it added.

It warned, however, that inflation risks are building after a muted start to the year, with lagged Sales and Services Tax effects, subsidy reform and higher minimum wages likely to push prices higher.

“Still, the absence of excess demand, improving supply capacity and targeted fiscal support should keep pressures contained,” it said.

-- BERNAMA