Kuala lumpur: Malaysia should prioritize the ringgit's long-term strength over its specific exchange rate levels, as this reflects the nation's economic health. Bank Muamalat Malaysia Bhd's chief economist, Dr. Mohd Afzanizam Abdul Rashid, emphasized this perspective in a discussion with Bernama.

According to BERNAMA News Agency, Dr. Mohd Afzanizam pointed out that the long-term strength of the currency is indicative of structural competitiveness, policy consistency, and governance quality. He highlighted expectations that the ringgit might test and potentially hover between 3.78 and 3.80 against the US dollar, though the timing remains uncertain due to external volatility and global currency dynamics.

The local currency recently ended stronger, with gains attributed to Malaysia's positive economic outlook amidst global uncertainties. An investment bank noted the potential for the ringgit to reach 3.78 following the US Supreme Court's decision to strike down a tariff policy, which could benefit emerging markets like Malaysia.

Dr. Mohd Afzanizam referenced historical data showing that the ringgit has traded at stronger levels in the past, suggesting the potential for further appreciation given supportive macroeconomic conditions. He emphasized the importance of policy consistency and structural reforms to enhance Malaysia's economic competitiveness and currency strength.

The economist also highlighted that political stability and robust governance are crucial for maintaining investor confidence. He noted the significant foreign ownership in Malaysian equities and the ongoing fiscal consolidation measures as positive indicators of reform momentum.

CGS International Securities head of economics, Nazmi Idrus, echoed these sentiments, stressing the role of domestic reforms and a weaker US dollar environment in supporting the ringgit's appreciation. However, he cautioned that the currency's trajectory is difficult to predict due to prevailing uncertainties.

The historical peg of the ringgit at 3.80 during the Asian Financial Crisis serves as a psychological barrier, reflecting past efforts to stabilize the currency in the face of severe economic challenges. Although the peg was lifted in 2005, its legacy continues to influence perceptions of the ringgit's value.