Kuala lumpur: The ringgit is projected to average around RM4.01 against the US dollar in 2026, with a potential easing to RM4.03 by the end of the year. This forecast is supported by expectations of fund flows returning to emerging markets, including Malaysia, in the latter part of 2026.

According to BERNAMA News Agency, MBSB Investment Bank Bhd (MBSB IB) indicated that the ringgit's trajectory is expected to remain weak in the short term due to heightened uncertainties, financial market volatility, and continued expectations of a rate hike by the Federal Reserve, which would bolster the US dollar.

Heightened global geopolitical tensions and persistent inflation have led to increased safe-haven flows into the US. Higher inflation further supports the Fed's stance on maintaining higher interest rates for an extended period. Conversely, strong export growth and a widening trade surplus continue to provide fundamental support for the ringgit.

Looking forward, MBSB IB suggests that any potential upside in the currency will heavily rely on easing inflation pressures, particularly if future Federal Reserve actions are limited to 'recalibrating hikes' rather than aggressive tightening measures. The bank also highlighted that elevated US inflation risks and ongoing geopolitical tensions are the primary uncertainties in its macroeconomic outlook.