KUALA LUMPUR (Dec 18): The ringgit is likely to appreciate through 2026 on the back of a resilient growth and appropriate policy settings, according to one of the currency’s most bullish forecasters.

The currency will likely hit 4.00 against the US dollar by the end of next year, Australia & New Zealand Banking Group said in its latest Asia Economic Outlook. Stable policy rate, underpinned by subdued inflation, will be positive for the ringgit, the bank’s economist Arindam Chakraborty wrote.

“These drivers are expected to endure through 2026, creating scope for additional appreciation,” he said.

The ringgit has strengthened more than 9% against the US dollar year-to-date, making it one of the strongest gainers in Asia in 2025. The local currency is now trading at around 4.09 against the greenback.

Bank Negara Malaysia kept its benchmark overnight policy rate unchanged at its last review in November and the central bank is widely-expected to stand pat for 2026 as well, drawing comfort from both domestic and external engines of growth firing at full speed.  

Inflation, meanwhile, has remained largely benign amid soft global commodity prices.

Budget 2026, which forecasts a 6.7% rise in tax revenues, is supported by continued sales-and-services tax, the introduction of a carbon tax on energy-intensive sectors, higher excise duties on alcohol and tobacco, and implementation of e-invoicing.

The measures, largely insensitive to growth, “reduce the risk of revenue slippage even in a low nominal growth environment”, Chakraborty said.

Overall, “the conservative monetary and fiscal stance is appropriate for the projected growth-inflation mix”, he noted.