Kuala lumpur: The recent appreciation of the ringgit against the US dollar is 'not unexpected,' as Malaysia's economy continues to strengthen, driven by infrastructure development, rising tourism arrivals, and better prices of commodities and electrical and electronics (E and E) products.
According to BERNAMA News Agency, Delta Leasing Bhd executive chairman Dr. Gregory Hii Sui Cheng stated that the stronger ringgit reflects growing confidence in the domestic economy, supported by the implementation of new infrastructure projects and better earnings from key sectors such as commodities, particularly palm oil. He remarked that the appreciation of the ringgit is not surprising given Malaysia's economic momentum through infrastructure growth, increased tourist inflow, and improved commodity and E and E product prices.
Hii anticipates that the stronger ringgit will have positive spillover effects on regional economies, including Sibu, as higher income among local planters leads to increased spending on goods and services. He noted that the Sibu economy will benefit as local planters, especially those involved in oil palm, will have more disposable income to spend at local retailers, with the automotive sector also expected to grow.
The ringgit appreciated by over 10 percent against the US dollar in 2025 and continued its upward trend last month. This strength was driven by a potential further narrowing of the interest rate differential between Malaysia and the United States, along with strong domestic economic fundamentals.
Analysts have projected the ringgit to remain firm, suggesting it could trade around 3.93-3.96 against the US dollar in the coming months. This is expected to benefit sectors reliant on imported raw materials and those with US dollar-denominated debt, boosting confidence in the local equity market.
Hii also highlighted that Malaysians would benefit from lower travel costs, particularly to neighboring Singapore, as the stronger ringgit makes overseas travel more affordable.
On the outlook of the ringgit, he noted that the local currency is expected to continue appreciating against the greenback amid concerns that the US economy may weaken further before recovering. However, he expressed uncertainty over the extent of the ringgit's appreciation and advised Malaysians holding US dollar and Singapore dollar assets to consider converting them into ringgit.
He suggested that increased inflows could be directed towards productive investments, including the domestic stock market, recommending an increase in investments in Bursa Malaysia to capitalize on the upward trend projected by many analysts.