Ringgit hits 7-year high against US dollar; Anwar says rally shows confidence in Malaysia
Malaysia Prime Minister Anwar Ibrahim said on Tuesday (Jan 27) that the recent strengthening of the ringgit has had positive effects on the country's economy, even as he acknowledged potential concerns.
A money changer counts Malaysian ringgit banknotes for customers in Kuala Lumpur. (File photo: AFP/Mohd Rasfan)
KUALA LUMPUR: The Malaysian ringgit traded at 3.9540 against the greenback at lunch break on Tuesday (Jan 27), continuing the Southeast Asian currency’s strongest performance in over seven years.
It marked a fresh high since at least May 15, 2018 - when it stood at the same level back then.
Earlier at 8am, the ringgit appreciated by as much as 0.8 per cent to 3.9750 per US dollar in morning trading compared to Monday’s close.
In recent years, the ringgit had largely traded at between 4.10 and 4.80 against the US dollar between 2019 and 2025, local media had reported.
On Tuesday, Malaysia Prime Minister Anwar Ibrahim said that the recent strengthening of the ringgit has had positive effects on the country's economy, even as he acknowledged potential concerns.
"Under normal circumstances, when the ringgit strengthens, there are positive effects, although there are some concerns related to exports and imports," he was quoted as saying in parliament by the New Straits Times (NST).
"Ideally, if we have a choice, the ringgit should strengthen in a prudent and gradual manner, but sometimes this happens beyond expectations. Investor confidence cannot be fully controlled."
Anwar further added that no country would want to see its currency depreciate far below its actual strength.
The prime minister was responding to a question from Kubang Pasu Member of Parliament Ku Abdul Rahman Ku Ismail who had asked about the impact of the ringgit's appreciation on Malaysia's exports and imports as well as the factors driving the currency's gains.
Anwar noted in his response to the opposition MP that the strengthening of the ringgit reflected growing confidence in the country’s economic system and increasing investment.
"Every positive development that elevates the country's standing and image naturally comes with certain constraints, but the impact is certainly positive.
"The ringgit had weakened for a long time, and when actions and activities demonstrate confidence in the national economic system and increased investment, this contributes to its strengthening," Anwar said, as quoted by NST.
Bank Muamalat Malaysia chief economist Mohd Afzanizam Abdul Rashid told NST that the ringgit's move below the 4.00 level against the greenback is “highly significant”.
He added that the sentiment toward the ringgit had been lacklustre for a long time - especially after 2018 - but that it is now gaining traction due to both internal and external factors.
"Externally, the factors include the US Federal Reserve's decision to cut interest rates.Currently, developments with the Japanese yen are also influencing the market, as the Japanese government and the US Fed are expected to intervene in the foreign exchange market to support the yen.
"By extension, this implies a weaker US dollar. Internally, Malaysia's economic prospects remain fairly positive despite external uncertainties. Overall, this is welcome news for all Malaysians," he was quoted as saying by NST.
Analysts whom CNA spoke to previously about the ringgit’s strong performance said that the Southeast Asian currency’s appreciation is a net positive for Malaysia.
This even though they warned that it could be seen as a double-edged sword where exporters and tourism players could see weaker demand with a stronger local currency.
Even so, these experts had said that the stronger ringgit reflects a combination of external factors and domestic fundamentals.
