The Malaysian ringgit has been navigating a relatively stable path for most of this year, but analysts from Credit Agricole and Malayan Banking Bhd predict it could dip to 4.6 per dollar by the end of June. Recently, the currency saw a slight uptick of 0.3%, bringing it to 4.4350 during early trading on Monday, helping to recover some of the losses from the previous week.

Economic Factors Influencing the Ringgit

Several factors are influencing the trajectory of Malaysia’s currency. David Forrester, a senior strategist at Credit Agricole, pointed out that the combination of dwindling global trade and sluggish growth in both China and Malaysia, exacerbated by Trump tariffs, could compel Bank Negara Malaysia to consider rate cuts later in 2025. Notably, the planned tariffs on chip imports by the U.S. could adversely affect Malaysia’s exports, as the U.S. is the nation’s third-largest market for semiconductor sales.

• Potential Rate Cuts: Analysts suggest that growing expectations for interest rate reductions by the Federal Reserve, sparked by fears of a U.S. recession, could alleviate some of the downward pressure on the ringgit.

• Year-End Forecast: According to Saktiandi Supaat, head of FX research at Maybank, the ringgit might stabilize around 4.35 per dollar by the year’s end, driven by fading perceptions of U.S. economic exceptionalism.

Current Economic Landscape

So far this year, the ringgit has appreciated by 0.6% against the dollar. In its March meeting, Malaysia’s central bank opted to keep its policy rate steady, citing the resilience of the domestic economy. While external factors will play a significant role in shaping the currency’s future, the bank emphasized that favorable economic conditions and ongoing structural reforms would continue to bolster the ringgit.

Economists surveyed in November anticipate that the central bank will maintain its current stance throughout the year. However, Audrey Ong, a strategist at Barclays Bank, expressed caution, noting that the recent slowdown in GDP growth might make policymakers less optimistic about the robustness of Malaysia’s economy in the face of potential U.S. tariffs.

Key Upcoming Economic Events

As the situation unfolds, market watchers will be closely monitoring key economic events in Asia this week, which could further influence the Malaysian ringgit’s performance.

In summary, while the ringgit has shown some resilience, external pressures and domestic economic factors will be critical in determining its future trajectory. Keep an eye on these developments as they unfold!