MBSB Sees Ringgit Supported By Resilient Fundamentals, Maintains RM4.01 2026 Outlook
KUALA LUMPUR, Sept 2 (Bernama) -- MBSB Investment Bank Bhd (MBSB IB) expects the ringgit to remain supported by Malaysia’s relatively resilient economic fundamentals, although short-term movements are likely to remain sensitive to United States (US) monetary policy expectations and broader risk sentiment.
In a research note today, MBSB IB said it maintained its expectation for the ringgit to average around RM4.01 in 2026 before ending the year at around RM4.03, despite continued volatility arising from changing expectations over the US Federal Reserve’s (Fed) policy path.
“A more sustained appreciation of the ringgit would require clearer signs of disinflation in the US, which could reduce expectations of prolonged Fed policy restrictiveness and improve global risk appetite.
“A less hawkish Fed would likely encourage renewed portfolio flows into emerging markets, providing additional support to the ringgit and other emerging market currencies,” it said.
According to MBSB IB, despite Malaysia’s resilient macroeconomic fundamentals, the domestic equity market returned to net foreign outflows, recording a strong outflow of US$426 million in August 2026 compared to a net inflow of US$74 million in July 2026.
It noted that in the bond market, the latest data showed foreign holdings of Malaysian debt securities declining by RM5.6 billion to RM304.2 billion from RM309.8 billion in June 2026.
Meanwhile, the bank said Malaysian Government Securities yields moved higher in August 2026, broadly tracking the rise in US Treasury yields, as hawkish expectations regarding the Fed’s policy stance resurfaced following Fed chair Kevin Warsh’s Jackson Hole remarks, prompting markets to increasingly price in a September 2026 rate hike.
“Nevertheless, non-resident holdings of Malaysian bonds remained at relatively healthy levels, suggesting that underlying foreign demand for ringgit-denominated fixed-income securities remains resilient and continues to provide some support to the ringgit,” it said.
MBSB IB remains cautious over upside inflation risks from prolonged elevated energy prices, higher producer costs and persistent geopolitical disruptions.
“Should these pressures translate into more persistent domestic inflation, Bank Negara Malaysia may have less room to maintain an accommodative policy stance.
“At the same time, Malaysia’s relatively strong macroeconomic fundamentals should continue to provide underlying support to the ringgit, allowing it to remain relatively resilient against both regional and major currencies,” it added.
-- BERNAMA