Kuala lumpur: The Malaysian ringgit is poised to be one of the region's stronger currencies, alongside the Singapore dollar, due to robust economic fundamentals and the influence of higher oil prices, even amidst a strong US dollar environment. This outlook was shared by Standard Chartered Bank.
According to BERNAMA News Agency, Divya Devesh, Co-head of Foreign Exchange (FX) Research for ASEAN and South Asia at Standard Chartered, highlighted that both the ringgit and the Singapore dollar are expected to remain resilient. Devesh pointed out that higher oil prices benefit Malaysia, as it is a net energy exporter. He elaborated on this during Standard Chartered's Global and ASEAN Outlook virtual briefing, noting that the ringgit and Singapore dollar should perform relatively well despite the US dollar's strength.
Conversely, Devesh noted that currencies of major commodity-importing countries like India, the Philippines, and Thailand might face challenges. These economies, being large net commodity importers, could see additional pressure on their currencies due to the stronger US dollar.
On a broader scale, Devesh expressed that the risk of significant foreign capital outflows from the ASEAN region appears limited. He indicated that many global investors are underweight in both debt and equity markets within the region. Institutional investors have maintained an overweight position on Latin America while keeping an underweight stance on ASEAN, showing little sign of change in the near term.
Edward Lee, Standard Chartered's chief economist and head of FX for ASEAN and South Asia, emphasized the ringgit's fundamental strength despite its recent depreciation. He attributed this weakness mainly to market positioning and temporary portfolio outflows linked to the MSCI index rebalancing rather than any deteriorating economic fundamentals.
Lee highlighted the ringgit's strong fundamentals and noted Malaysia's improving balance of payments. He mentioned that Malaysia's services balance has recorded a surplus over the last three quarters, following a long period of deficit, driven by stronger tourism receipts and rising services exports linked to the growing data center industry.
Additionally, Lee remarked that Malaysia has managed the global energy crisis relatively well, aided by fuel subsidies that have cushioned consumers and supported economic activity. While subsidies are costly, Malaysia is currently positioned to sustain them, contributing to economic stability.
Looking ahead, Malaysia is expected to expand by about 4.5% in 2026, driven by resilient domestic demand, sustained foreign direct investment, a robust manufacturing sector, and continued growth in the data center industry.
On the global stage, Eric Robertsen, the bank's global head of research and chief strategist, mentioned a revision in the global growth outlook for the year, down to 3.0% from 3.4%. This adjustment is primarily due to conflict-induced downgrades in West Asia. Robertsen noted that the resilience of the global economy is largely supported by the outperformance of tech and artificial intelligence-related exports, particularly contributing to economic momentum in Asia and the resilience of the US economy.