Ringgit's Appreciation 'Not Unexpected' As Malaysia's Economy Gets Stronger

By Frank Julian Anak Martin

SIBU, Feb 2 (Bernama) -- The recent appreciation of the ringgit against the US dollar is “not unexpected,” as Malaysia’s economy continues to strengthen, driven by infrastructure development, rising tourism arrivals and better prices of commodities and electrical and electronics (E&E) products.

Delta Leasing Bhd executive chairman Dr Gregory Hii Sui Cheng said the stronger ringgit reflects growing confidence in the domestic economy, supported by the implementation of new infrastructure projects and better earnings from key sectors such as commodities, particularly palm oil. “The appreciation of the ringgit is not unexpected as Malaysia’s economy is gaining momentum through infrastructure development, increased inflow of tourists and improved commodity as well as E&E product prices,” he told Bernama when asked about the local currency’s recent performance.

Hii reckons that the stronger ringgit would bring positive spillover effects to regional economies, including Sibu, as higher income among local planters would translate into increased spending on goods and services. “The Sibu economy will benefit as local planters, especially those involved in oil palm, will have more disposable income to spend at local retailers. The automotive sector is also expected to enjoy better growth,” he said.

The ringgit appreciated by over 10 per cent against the US dollar in 2025 and continued its upward trend last month. The strength was driven by a potential further narrowing of the interest rate differential between Malaysia and the United States, along with strong domestic economic fundamentals.

Analysts have projected the ringgit to remain firm, with forecasts suggesting it could trade around 3.93-3.96 against the US dollar in the coming months. This is expected to benefit sectors that rely on imported raw materials and those with US dollar-denominated debt, and boost confidence in the local equity market. 

Hii also pointed out that Malaysians would benefit from lower travel costs, particularly to neighbouring Singapore, as the stronger ringgit makes overseas travel more affordable.

On the outlook of the ringgit, he noted that the local currency is expected to continue appreciating against the greenback amid concerns that the US economy may weaken further before recovering.

However, he expressed uncertainty over the extent of the ringgit’s appreciation and advised Malaysians holding US dollar and Singapore dollar assets to consider converting them into ringgit. “Against the scenario of a strengthening ringgit, I would advise Malaysians holding US dollar and Singapore dollar assets to take action and convert to ringgit now. Those who did so four months earlier would already be holding more ringgit,” he added.

He said increased inflows could be channelled into productive investments, including the domestic stock market. “One good avenue is to increase investments in Bursa Malaysia and ride on the upward trend projected by many analysts,” he added.

-- BERNAMA