Kuala lumpur: With less than a week remaining before the close of 2025, the ringgit continued its upward momentum, trading around 4.04 against the US dollar, its highest level in nearly five years. The currency's performance reflects growing confidence among investors and traders in Malaysia's economy.

According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid highlighted that the ringgit's strength was evident not only against the US dollar but also relative to other regional currencies, including the Singapore dollar. He suggested that recent economic reforms and fiscal consolidation measures have boosted investor confidence, potentially enabling the ringgit to return to its long-term average of RM3.82, a level last seen in July 2005.

IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan noted that the ringgit's rise to around 4.04 reflects a genuine improvement in Malaysia's macroeconomic and balance-of-payments fundamentals. He emphasized that a structurally strengthened external account, including a widening goods surplus and normalizing tourism receipts, has contributed to the ringgit's resilience without the need for aggressive domestic rate hikes.

However, Mohd Sedek cautioned that global financial conditions would play a significant role in determining the sustainability of the ringgit's current rally. He pointed out that factors such as US Treasury yields, equity market volatility, and global credit market stress could impact the currency's stability.

The reaffirmation of Malaysia's AAA rating with a stable outlook by MARC Ratings was also highlighted as a positive domestic signal, reinforcing confidence in Malaysia's fiscal position and monetary framework.

Looking ahead to 2026, Mohd Sedek expressed optimism that Malaysia's adherence to fiscal discipline and strong external positioning could see the ringgit occasionally trading below the 4.00 level, driven by regional trade and investment flows.

Juwai IQI Global chief economist Shan Saeed described the ringgit's recent recovery as measured and underpinned by improving macroeconomic fundamentals. He emphasized that the currency's outlook is shaped more by structural resilience than cyclical swings, with potential for further strengthening contingent on global monetary easing and continued domestic policy credibility.