Malaysian Ringgit soars to new heights with its best quarterly performance in 50 years
Author: Woo Yi Ting (Research Executive)
In the third quarter of 2024, the Malaysian ringgit climbed to a 30-month high of 4.1815 against the US dollar, appreciating over 12% against the USD (Wong, 2024). Compared to the Singapore dollar, the ringgit is up 6 percent, from 3.4762 per SGD on June 28 to 3.2584 on Sept 20 (Burgess, 2024). This significant rise positions the ringgit as one of the best-performing currencies globally. Analysts predict this could be the strongest quarterly performance for the ringgit since 1973, suggesting a robust recovery and potential for sustained upward momentum.
One of the primary drivers of MYR appreciation is the weakening of the USD. In Q3 2024, the Federal Reserve lowered the federal funds rate by 50 basis points, from a range of 5.25% to 5.50% to a range of 4.75% to 5.00%. Lower interest rates diminish the attractiveness of USD-denominated assets, leading to less foreign capital inflow. As demand for USD decreases, its value declines, which in turn results in a lower exchange rate. This depreciation makes emerging market currencies, including the MYR, gain strength in comparison. As Malaysian assets become more appealing to investors, the surge in capital inflows into Malaysia boosts the demand for the MYR, further contributing to its appreciation against the USD (MIDF Research, 2024).
Additionally, the appreciation of MYR is closely linked to domestic policy changes. The Malaysian government has actively encouraged government-linked companies (GLCs) and government-linked investment companies (GLICs) to repatriate their earnings. GLCs are businesses where the government holds a significant stake and operates across various sectors, including utilities, telecommunications, and finance. This initiative can increase the demand for MYR as GLCs convert their foreign earnings into local currency for domestic operations, investments, and distributions. This conversion process raises the demand for MYR in the foreign exchange market, enhances Malaysia’s foreign reserves, and signals confidence in the country’s economic stability, thereby reinforcing positive investor sentiment and supporting the currency’s appreciation (International Monetary Fund, 2024).
The appreciation of MYR can have significant implications for Singapore's economy due to its close economic ties. As a close trading partner, fluctuations in the MYR can affect trade balances between the two countries. It can alter trade balances, making Singapore exports more competitive in Malaysia while increasing the costs of Malaysia goods imported into Singapore. This can lead to shifts in trade flows and affect local industries reliant on cross-border trade.
While the current appreciation of the MYR is supported by several favorable factors, questions about its sustainability linger. External factors, such as shifts in global economic conditions or changes in US policy, could quickly alter the landscape. For instance, in April 2025, MYR appreciated 0.6% against the US dollar, ending the month at RM4.434 compared to RM4.463 in March. This appreciation, which brought the MYR’s year-to-date gain to 3.6%, was driven by a weaker US dollar, influenced by market volatility and reduced demand amidst concerns over US trade policies and tariffs. Malaysia was hit by a 24% reciprocal tariff imposed by the US, and this tariff raised concerns about reduced export volumes, job losses, and supply chain disruptions. Despite these challenges, the ringgit benefited from a shift in investor sentiment. With increased uncertainties in global trade and economic conditions, there was a flight to safer assets, such as the ringgit, particularly as the US dollar weakened in the face of global trade tensions. The US tariffs exacerbated fears about inflationary pressures, and as the USD’s appeal waned, the MYR gained strength due to reduced demand for the greenback (MIDF Research, 2025).
Therefore, the long-term sustainability of MYR’s appreciation hinges on maintaining strong economic fundamentals, global economic stability, and investor confidence. The current appreciation, while beneficial, remains sensitive to external shocks, such as changing trade dynamics or shifts in the global monetary landscape.
References
Burgess, M. (2024). Malaysia Ringgit Set for Best Quarter Since 1973, Signaling More Gains. Bloomberg. https://www.bloomberg.com/news/articles/2024-09-22/ringgit-s-likely-best-quarter-in-five-decades-signals-more-gains?embedded-checkout=true
International Monetary Fund (2024). Malaysia: 2025 Article IV Consultation - Press Release; and Staff Report. IMF Country Report No. 25/057.
MIDF Research (2024). Ringgit Becomes Top Performing Currency Benefiting from the Fed’s Shift to Policy Easing. Sep-24 Monthly Currency Review. https://www.midf.com.my/sites/corporate/files/2024-10/currency-msia-september_2024_review-midf-021024.pdf
MIDF Research (2025). Ringgit Strengthened in April 2025 as US Dollar Took a Beating. Apr-25 Monthly Currency Review. https://www.midf.com.my/sites/corporate/files/2025-05/econs-msia-april_currency-midf-020525_0.pdf
Wong C.W. (2024). Malaysian pride soars with the ringgit. The Star. https://www.thestar.com.my/business/business-news/2024/09/29/malaysian-pride-soars-with-the-ringgit