Kuala lumpur: The ringgit is expected to trade in a narrow range next week, hovering between 4.03 and 4.05 against the US dollar amid a holiday-shortened week. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said this is mainly due to the New Year celebrations and a lack of market catalysts.
According to BERNAMA News Agency, the ringgit's performance has been influenced by several factors. Kenanga Investment Bank Bhd noted that after breaking above 4.00 versus the US dollar for the second time since June 2018, the ringgit has struggled to sustain a move below that level for nearly seven years. The bank maintained its end-2025 forecast of 4.08 against the US dollar but sees potential for the ringgit to end the year closer to 4.00. This level is expected to present strong resistance.
Kenanga Investment Bank further indicated that seasonal US dollar strength in the first quarter of 2026, combined with a still-resilient US growth narrative, could push the pair back towards 4.05-4.10 against the US dollar early in the year. Beyond that, the ringgit is expected to gradually strengthen towards its long-term fair value as structural support for the US dollar continues to erode.
The local currency traded mixed this week, opening at 4.07 before strengthening to as high as 4.0410 on Friday morning, then easing to close the week at 4.0470. At 8 am yesterday, the ringgit surged to 4.0410/0495 against the greenback from 4.0425/0515 at Wednesday's close, marking its highest level in nearly five years. The market was closed on Thursday in observance of Christmas Day.
Earlier this week, the local currency was mainly influenced by expectations of a US interest rate cut and weaker US consumer confidence. On a weekly basis, the ringgit strengthened against the greenback, closing higher at 4.0470/0535 compared with 4.0740/0785 at the end of last week.
The ringgit also showed a mixed performance against a basket of major currencies. It strengthened against the Japanese yen and appreciated versus the euro, but fell vis-a-vis the British pound. Among ASEAN peers, the ringgit gained against the Indonesian rupiah, increased against the Singapore dollar, and advanced against the Philippine peso, while it depreciated vis-a-vis the Thai baht.