Ringgit Poised for Rally on Oil Demand and AI Supply Chain Ties
Malaysia's ringgit currency could be poised for a rally due to several positive factors. According to strategists at Goldman Sachs and MUFG Bank, higher crude oil prices will boost energy exports and tie Malaysia more closely to stronger semiconductor demand in the AI supply chain.
The ringgit has lagged its Asian peers this year, but MUFG expects it to appreciate to 4.03 per dollar by year-end, while Sumitomo Mitsui Banking Corp. projects a price of 4.0. Jeff Ng from Sumitomo Mitsui believes that 'Malaysia's overall fundamentals are still positive,' citing energy and electronics exports as well as links to a firmer yuan.
Lloyd Chan at MUFG also sees scope for ringgit strength, pointing to attractive sovereign bond and ringgit valuations. Malaysia's trade surplus in electronics has helped offset higher oil import costs, and the currency remains about 2% below its 20-year average effective exchange rate.