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MALAYSIA’S drive to see the ringgit strengthen to RM4 against the US dollar within the next 12 months is contingent on the simultaneous alignment of seven major economic and policy factors, according to analysts at AmBank Group.
In its latest economic report, AmBank noted that while Malaysia’s bright economic prospects and ongoing fiscal consolidation should act as a positive driver for the ringgit, additional catalysts are required to push the currency beyond the RM4 mark.
“Such a strengthening would represent a further appreciation of more than five per cent, particularly following strong performances in 2024 and 2025,” the report stated.
The bank outlined the seven critical conditions for achieving the targeted exchange rate. Firstly, the US Federal Reserve must implement deeper interest rate cuts than currently anticipated, a scenario dependent on a significant decline in core US inflation or a sharp weakening of the labour market.
Secondly, there would need to be an erosion of confidence in US fiscal policy or its government bonds.
Thirdly, Malaysia’s electrical and electronics sector must secure preferential access to the US market, including minimal tariffs that provide a competitive advantage over regional rivals such as Vietnam, Thailand, and Taiwan.
Fourth, the global semiconductor upcycle must maintain momentum, driven by expectations of expanded artificial intelligence applications across industries and visible profit potential throughout the ecosystem.
Fifth, Malaysia’s domestic economy must remain resilient, underpinned by a stable labour market and sustainable private consumption.
The sixth condition involves oil and gas revenues exceeding expectations, coupled with successful government energy subsidy rationalisation. Finally, a positive review of Malaysia’s sovereign credit rating would further strengthen investor confidence.
AmBank observed that the ringgit had already recorded a 1.8 per cent gain against the US dollar in November 2025 during the fourth quarter, adding to cumulative gains of 8.2 per cent for the year so far, following a 2.7 per cent appreciation in 2024 and a 4.1 per cent depreciation in 2023.
However, analysts cautioned that the rapid gains in November were not supported by fresh domestic catalysts, as positive data on trade, GDP growth, and Bank Negara Malaysia policies had already been priced in.
As a result, the ringgit is expected to face near-term selling pressure, with a revised target of RM4.16 against the US dollar by the end of 2025, reflecting a potential one per cent depreciation.
The report also examined the monetary policy divergence between Bank Negara Malaysia and the Federal Reserve. BNM is expected to maintain a cautious stance with the Overnight Policy Rate at 2.75 per cent, while the Fed, despite lowering rates in October, continues to signal a tighter policy.
Analysts warned that this divergence could create medium-term headwinds for the ringgit and may impact export sectors such as semiconductors, which rely heavily on high-tech demand from the US.
AmBank Group concluded that while the ringgit has shown resilience, achieving the RM4 target requires favourable developments on multiple domestic and international fronts, making it a challenging but potentially attainable milestone. - November 16, 2025