Malaysia’s ringgit has emerged as Asia’s strongest-performing currency this year, but financial analysts are signalling that its rally may be moving too quickly to sustain. A new report from Singapore’s DBS Bank highlighted that the ringgit has gained close to 8% against the US dollar since the beginning of 2025 — a pace that may invite a short-term pullback.
On 13 November, the ringgit traded at RM4.13 to the US dollar, a level not seen since early 2021. This sharp appreciation has drawn attention, especially as the currency’s performance appears closely linked to the movements of the US Dollar Index (DXY). Based on current trends, DBS noted that the support level for USD/MYR remains around RM4.10.
The bank’s research pointed out that further strengthening of the ringgit is unlikely unless the DXY falls decisively below 99.5 points. Analysts added that investors hoping to see the exchange rate move toward RM4.00 would need to expect an even deeper slide in the DXY — a scenario they believe may not materialise soon.
DBS also cautioned that the ringgit’s acceleration may be happening “too fast,” raising the possibility of a mild correction before the end of the year. Despite the recent surge, the bank maintained its year-end forecast for the USD/MYR rate at around RM4.17.
Recent market movements show how sensitive the ringgit is to shifts in the DXY. Shortly after the ASEAN Summit on 27 October, the ringgit climbed past RM4.22, then strengthened further to RM4.18 two days later. A brief rise in the DXY to 100 points on 4 November caused the ringgit to retreat slightly above RM4.20. When the DXY eased back to 99.5 on 12 November, the ringgit rebounded again, settling near RM4.12.
According to DBS, the ringgit tends to follow the direction of the DXY more than the magnitude of its swings. This pattern suggests that external factors — particularly US dollar movements — remain a key determinant of Malaysia’s currency outlook.
Meanwhile, Bank Negara Malaysia held its benchmark interest rate steady during its final monetary policy meeting of 2025. The central bank expressed optimism about Malaysia’s economic trajectory, supported by preliminary data showing a 5.2% GDP growth rate in the third quarter. Inflation also remained below 2%, signalling stable domestic price conditions.
While the ringgit’s strong performance reflects growing confidence in Malaysia’s economy, analysts believe the pace of its climb warrants caution as markets prepare for possible adjustments ahead.
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