Ringgit Set to Remain Firm in 2026 Amid Middle East Tensions, Analysts Say

Why It Matters

The ringgit's ability to stay firm despite external shocks signals confidence in Malaysia's economic fundamentals and offers a rare stable currency in a region often swayed by commodity price swings. For foreign investors and multinational firms, a predictable exchange rate reduces hedging costs and supports cross‑border trade. If the Fed does ease rates as projected, the narrowing differential could accelerate capital inflows into Malaysia, bolstering asset prices and supporting the government's growth agenda. Conversely, prolonged geopolitical tension could reverse gains, highlighting the delicate balance between domestic policy and external risk factors.

Key Takeaways

• MBSB Research forecasts an average RM3.92 per USD in 2026, down from RM4.28 in 2025.
• Hong Leong Investment Research projects the ringgit to end 2026 at RM3.90 per USD.
• U.S. March payrolls added 178,000 jobs, prompting expectations of a Fed rate‑pause through 2026.
• Kenanga IB expects the ringgit to hover near 4.05 per USD amid Middle East volatility.
• Ringgit slipped 3.9% month‑on‑month in March, closing at RM4.046.

Pulse Analysis

The ringgit's resilience is unusual in a market where emerging‑market currencies typically depreciate during global risk aversion. Malaysia's relatively low external debt and strong current‑account surplus provide a buffer that many of its ASEAN peers lack. The narrowing rate gap is a subtle but powerful lever; even a 10‑15 basis‑point reduction in the Fed's policy rate could tilt the carry trade in favor of the ringgit, attracting speculative capital.

Historically, the ringgit has struggled to break the RM4.00 barrier for sustained periods, often retreating when oil prices dip or when U.S. monetary policy tightens. The current environment—high oil prices, a rebounding domestic recovery, and a potentially dovish Fed—creates a confluence of supportive factors. However, the market remains highly sensitive to geopolitical flashpoints. Any escalation that threatens oil supply routes could quickly reverse sentiment, as seen in the recent week‑on‑week depreciation.

Traders should therefore adopt a dual‑track strategy: position for modest upside based on policy expectations while maintaining tight risk controls for sudden geopolitical spikes. Monitoring the Fed's dot‑plot releases, U.S. inflation data, and diplomatic signals from the Middle East will be essential to navigate the ringgit's near‑term path.