Exporters Drive Malaysian Ringgit Rally Through Currency Conversions
Malaysian exporters and foreign investors are converting foreign currency into ringgit, driving the currency's strength and prompting forecasts of further gains by 2027.
The Malaysian ringgit is strengthening as exporters, particularly in the semiconductor sector, increase the conversion of foreign-currency earnings into the local currency. This trend is supported by Bank Negara Malaysia, which has encouraged both private and state-linked firms to repatriate and convert their foreign income.
Central bank data indicates that foreign-currency deposits fell 8.6% to RM308 billion in August, marking the sharpest monthly decline since 2010. Analysts note that this drop in deposits since July suggests a rise in business conversions. Further support for the currency comes from foreign direct investment in semiconductor manufacturing and the construction of data centers.
BNP Paribas SA predicts the ringgit could reach 3.90 per dollar by June 2027, improving from its current level of approximately 4.08. This forecast is based on robust economic fundamentals and the expectation that corporate conversion flows will continue to rise as onshore exporters seek to reduce foreign exchange exposure.
