Estimated reading time: 15 minutes
The Ringgit Malaysia just hit its strongest level again against the USD and SGD, but it’s not stopping there. It is performing incredibly well against major currencies across the board.
To put numbers on it, as of 30 January 2026:
- It is trading around RM3.90 per US dollar.
- 2025: up around 9% against the US dollar.
- 2026: up around 3% so far.
- It is officially recognized as Asia’s best-performing currency.
Even at these highs, analysts say the Ringgit is still undervalued considering how heavily it was sold in previous years. This momentum has pushed Malaysia’s FX market to be 40% more active than the 2020-2024 average.
Which leads to the real questions:
- Why did the Ringgit suddenly strengthen?
- Is Malaysia doing better, or just riding a weaker US dollar?
- How does this actually affect you?
TABLE OF CONTENTS
The History of the Ringgit
Before answering those questions, let’s look back at the Ringgit’s history.
Back in the 1990s, Malaysia’s economy was growing rapidly. Heavy infrastructure spending and strong exports powered the country forward, and Malaysia was once considered a “rising Asian tiger.”
Then came 1997, the Asian Financial Crisis hit hard. The KLSE plunged nearly 70%, and the Ringgit fell sharply from RM2.42 to RM4.88 against the US dollar by January 1998.
In response, the government stepped in. In September 1998, the Ringgit was pegged at RM3.80 to the US dollar and capital controls were imposed. Politics aside, the move worked. Malaysia stabilised quickly, returned to growth within a year, and saw inflation fall and exports recover.
Once things had settled, the peg was lifted in 2005 and the Ringgit floated again. For a while, things looked good and we enjoyed a strong Ringgit.
But from around 2014 to 2018, the story flipped. Oil prices collapsed, the 1MDB scandal damaged investor confidence, and US interest rate hikes reduced the Ringgit’s attractiveness, draining foreign reserves and turning it into Southeast Asia’s worst-performing currency.
And in 2020, the Covid-19 pandemic hit, worsening economic conditions and further pressuring the Ringgit.
Then fast forward to 2022-2023, the US Federal Reserve hiked rates aggressively, the US dollar surged, and Asian currencies, including the Ringgit, were heavily impacted. On 20 February 2024, the Ringgit fell to a 26-year low of around RM4.7965 per US dollar, its weakest level since the 1998 crisis and among the region’s worst performers.
But now, fast forward to the end of 2025.
How on earth did we go from multi-decade lows to suddenly becoming Asia’s best-performing currency? Did the government suddenly do something right?
Why Is The Ringgit Suddenly So Strong?
Now, all the forces behind the Ringgit Rebound are interconnected, and there are exactly five reasons WHY this happened.
WHY 1 – The US Fed & Rate Differential
You see, currencies are like gravity – money flows to where the returns are higher. For a while, the US Dollar was the center of the universe, but that’s now starting to change.
In 2022 and 2023, the US Federal Reserve raised interest rates aggressively. Higher rates meant better returns on US assets, so global investors piled into the US dollar. As a result, the Ringgit weakened, sliding toward RM4.80 per USD.
By late 2024 and into 2025, that cycle began to reverse.
The US Fed started cutting rates, which reduced the “extra” reward investors got from holding US dollars. At the same time, Bank Negara Malaysia kept its policy rate steady, maintaining consistency since mid-2023.
As this interest rate gap narrowed, holding USD became less attractive. The so-called “USD premium” slowly disappeared.
With US returns weakening, capital began flowing toward markets offering relatively better yields and growth potential – including emerging markets like Malaysia, which directly increased demand for the currency and pushed it higher.
So yes, part of this rally is simply the result of a US dollar that has lost some of its shine, while Malaysia happens to be in the right place at the right time to benefit from it.
WHY 2 – Malaysia is doing something right ourselves
The Ringgit’s recovery isn’t just about “good timing” with the US. Credit has to be given where it’s due. When it comes to a country’s economy, there are usually two major levers the government controls:
- Monetary policy (Bank Negara): focused on interest rates and price stability
- Fiscal policy (The Government): covering spending, taxes, and subsidies
- Political stability (The Government): All of this only works smoothly when this critical factor is in place, which ensures policies don’t suddenly flip overnight.
2.1 Monetary Policy
When inflation surged globally, many central banks reacted aggressively, hiking rates sharply and then cutting them just as fast. That kind of policy creates uncertainty for investors.
Source: Bank Negara Malaysia
Bank Negara Malaysia took a more measured approach.
- Rates were raised earlier in the cycle
- A single cut was made in July 2025
- OPR has been kept steady at 2.75%
- The rate is expected to remain unchanged
As a result, inflation has remained relatively contained. Headline inflation is around 1.4%, while core inflation sits near 1.9% – both low compared to many peer countries.
Don’t believe me? Take a look at this comparison:
Source: Trading economics
Because of this, foreign investors increasingly see Malaysia as a market where monetary policy is predictable, inflation is under control, and yields are becoming more attractive relative to US Treasuries.
If you want to stay ahead of currency moves, keeping an eye on data like OPR decisions and inflation releases matters. Platforms like Moomoo make it easier to track these economic indicators in one place. Steps to find: Moomoo App > Market > MY > Economic Calendar
2.2 Fiscal Discipline
Source: The edge
For years, Malaysia has been criticised for running large budget deficits. In simple terms, the government was spending more than it earned, especially on subsidies. While this helped the rakyat in the short term, over time it became unsustainable – draining national reserves and pushing investors away.
Over the last two years, something has clearly changed. The government began making painful but necessary reforms to cut costs and reduce leakages. That meant tightening tax collection, moving away from blanket subsidies, and rolling out more targeted assistance instead.
The improvement is showing up in the numbers. In 2024, the government beat its own deficit target, bringing it down to 4.1%, better than the 4.3% initially planned. Looking ahead, economists expect Malaysia to move closer to its 3.8% target in 2025-2026.
This shift sends a clear message to investors: Malaysia is becoming more serious about managing its finances and preventing debt from spiralling out of control.
Even Fitch Ratings has indicated confidence in Malaysia’s fiscal discipline. Other credit rating agencies have also kept Malaysia at the A-/A3 rating which signals fiscal stability as well as a strong and stable economic outlook.
2.3 Political Stability & Predictable Policy
From 2018 to 2022, Malaysia went through multiple changes of government. The Sheraton Move and ongoing political uncertainty didn’t just scare the rakyat, it also pushed global investors away. Simply put, that period was not investor-friendly at all.
But since late 2022, whether people agree or not, Malaysia has had a relatively stable coalition under Prime Minister Anwar Ibrahim. There have been no surprise snap elections and no midnight power shifts. Over time, that stability reduces Malaysia’s political risk premium.
When you combine that with economic policies that have remained largely predictable, foreign funds feel more comfortable placing long-term bets here, especially when they compare us to neighbours that face higher political and fiscal risk.
WHY 3 – Real Economic Growth
At the end of the day, it really comes down to three things: monetary prudence, fiscal discipline, and political stability. And whether we like it or not, the results are starting to show.
Source: Bank Negara Malaysia
1. GDP growth is strengthening:
Q3 2025 growth came in at 5.2% YoY, up from 4.4% in Q2, placing Malaysia second among ASEAN economies.
2. Tourism is back:
Visitor numbers are close to pre-pandemic levels, and tourist spending doesn’t just contribute to GDP – it also strengthens the Ringgit as more foreign currency flows in.
3. FDI coming in:
In the first nine months of 2025, Malaysia recorded RM285.2 billion in approved investments, a 13.2% increase from 2024. And foreign investment makes up more than 50% of the total. These 4,874 approved projects are also expected to create over 152,000 new jobs across multiple sectors.
Put together, the picture becomes clearer. Solid growth, a continuing investment upcycle, and Malaysia’s rise as a data centre hub explain why optimism around the country is returning. And that’s why the future for Malaysia is starting to look bright again.
If you prefer seeing the numbers for yourself, Moomoo provides Malaysia’s real GDP data to help you track growth, inflation, and policy indicators in a simple, visual way. Steps to find: moomoo App > Market > MY > Macroeconomic Data
WHY 4 – Capital Inflows: Bonds
When you combine the earlier factors of steady monetary policy, improving fiscal discipline, political stability, and stronger growth – the outcome is simple: money flows back into Malaysia.
As investor confidence improves, foreign funds buy Malaysian bonds. Every bond purchase requires foreign currency to be converted into Ringgit, whether from USD, SGD, or other currencies. This directly increases demand for the Ringgit in the FX market.
And these aren’t small flows. We’re talking about billions of Ringgit, large enough to impact the FX market.
This shift isn’t just theoretical. As early as June 2025, bond investors began rotating out of US assets and into Asian debt markets, with Malaysia emerging as a top destination.
So far this year, foreign investors have bought nearly RM16.52 billion worth of Malaysian bonds. In November 2025 alone, inflows reached RM5.35 billion across government and corporate bonds. When that much money comes in, it directly pushes up demand for the Ringgit.
Capital inflows don’t happen in isolation. Platforms like Moomoo help put fund movements into context, showing how foreign and local money shifts across Malaysia over time. Steps to find: moomoo App > Market> MY > Capital Flow
WHY 5 – Trade, Rare Earths & “China+1” Strategy
Source: The independence
On the diplomacy side, Malaysia’s global positioning has quietly improved. Whatever PMX has done in hosting the ASEAN meeting and welcoming Trump, that has actually added so much strength to the image of the country – economically.
Even with US tariffs still in place on some Malaysian exports, the recent developments are actually favourable. Malaysia and the US signed a reciprocal trade arrangement that locks in a 19% general tariff, while selected products like rubber, cocoa, and aircraft parts enjoy zero tariffs. That kind of clarity goes a long way for exporters and investors who just want certainty.
On top of that, Malaysia is holding its ground on the ban against exporting unprocessed rare earths, even after signing a critical minerals deal with the US. It’s a bold call, but the idea is simple. Process the materials here first, keep more value in the country, and let local companies benefit.We’re already seeing this play out. Companies like Lynas Rare Earths are expanding in Malaysia. That means more long-term investment, more jobs, and more know-how staying local.
Source: The Edge
Looking around the region, the global “China+1” shift is also working in Malaysia’s favour. Manufacturers are spreading their supply chains across Southeast Asia, and Malaysia checks a lot of boxes. Strong E&E ecosystem, decent infrastructure, and policies that are starting to make more sense for investors.
Put all of this together and the picture is pretty clear. Malaysia is no longer just remembered for 1MDB. It’s increasingly seen as a practical, neutral place to do business, and investors are responding to that. That shift is a big reason the Ringgit looks strong today.
Winners & Losers
Of course, currency movements are a double-edged sword. A stronger Ringgit creates clear winners and losers. So, now let’s address the winners and victims of a stronger Ringgit.
Winners
Importers: Cheaper raw materials and USD-priced inputs, so costs come down almost automatically.
Consumers: Overseas travel and imported items become more affordable. Higher spending power.
Losers
Exporters: Products become pricier overseas. USD earnings shrink when converted back.
Tourism: Slower arrivals from weaker-currency countries. Pressure on some hotspots.
In short, a stronger Ringgit creates clear winners and losers. It boosts purchasing power and lowers costs, but it also puts pressure on exports and certain parts of the tourism sector.
Currency moves don’t affect every sector the same way. Market overviews on platforms like Moomoo help visualise which industries are gaining and which are under pressure as conditions change. Steps to find: Moomoo App > Market > MY > Heat Map
Analyst Outlook: Can this Ringgit Comeback Last?
Here’s what analysts are saying about this Ringgit Rebound.
Base case:
From what most banks are saying, the sharp rally may cool off. But as long as Malaysia keeps its fundamentals intact and the US dollar doesn’t stage a strong comeback, the Ringgit should remain fairly stable.
Bull case:
If reforms move faster, foreign investment picks up, and growth stays positive, the Ringgit could push below to 3.90.
Bear case:
However, if things turn ugly, think of a global shock, a suddenly strong US dollar, or political issues at home, capital would likely flow back out. And if that happens, the Ringgit could weaken again.
Final Thought
So, from what I see, Malaysia isn’t just benefiting from external factors, we’re actually doing some things right at home. Fundamentals are improving, fiscal discipline is slowly taking shape, monetary policy has stayed steady, and politics has become more predictable than it was a few years ago.
Put all of that together and the message is pretty clear: investors are starting to trust Malaysia again.
If you’re curious to observe how markets respond, you can sign up for Moomoo here to explore economic data and market trends at your own pace.
If you prefer a video version of this article, I have made a video covering the exact same thing – do check it out here! Thanks for reading!
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