MUFG Predicts Ringgit to Strengthen to 3.98 by 2027

MUFG Bank predicts the Malaysian ringgit will outperform most Asian currencies in the final quarter of 2026, driven by strong electronics exports despite rising oil prices. The bank anticipates Bank Negara Malaysia will keep the overnight policy rate at 2.75% until the third quarter of next year, as inflation remains under control.

The ringgit, currently trading around 4.09 against the US dollar, is expected to strengthen to 4.03 by the end of 2026 and further to 3.98 by the third quarter of 2027. MUFG highlights Malaysia's resilient trade position and continued investment in information and communications technology as key factors supporting this outlook.

Despite near-term volatility due to higher fuel-subsidy costs and global bond yields, MUFG believes Malaysia's robust external position and improving capital flows will continue to bolster the ringgit over the medium term. The country's economic growth has also shown strength, with GDP expanding by 6% year-on-year in the second quarter of 2026, compared to an average pre-pandemic growth rate of 4.9%.

MUFG emphasizes that Malaysia's electronics surplus helps cushion the impact of higher oil prices, maintaining the ringgit's medium-term outlook. The bank notes that stronger US spending on computers and related equipment has supported demand for Malaysian electrical and electronics exports, further strengthening the currency's fundamentals.