KUALA LUMPUR (Oct 5): The ringgit is expected to outperform most Asian currencies in the final quarter of 2026, supported by Malaysia’s strong electronics exports despite pressure from higher oil prices, according to MUFG Bank.

It also expects Bank Negara Malaysia to maintain the overnight policy rate at 2.75% until the third quarter of next year as inflation remains contained.

The ringgit was trading around 4.09 against the US dollar on Monday morning. MUFG expects it to strengthen to 4.03 by end-2026, before advancing further to 3.98 by the third quarter of 2027.

MUFG expects the ringgit to be the strongest performing  Asian currency covered in its latest foreign-exchange outlook.

“Malaysia’s electronics surplus continues to cushion the oil shock,” MUFG said, adding that Malaysia's trade position remains relatively resilient  amid elevated energy prices.

“This means higher oil prices are likely to remain a headwind for the ringgit rather than derail its medium-term outlook,” MUFG said.

Malaysia is also benefiting from continued investment in information and communications technology, including data centres and cloud computing. 

Services investment approvals rose more than 20% year-on-year in the first half of 2026, supported largely by ICT-related investments.

MUFG said stronger US spending on computers and related equipment has also helped support demand for Malaysian electrical and electronics exports.

“MYR fundamentals remain intact despite higher oil prices and the recent bond sell-off,” the bank said.

While near-term volatility could persist as investors watch higher fuel-subsidy costs and global bond yields, MUFG said Malaysia’s resilient external position, improving capital flows and attractive valuations should continue to support the ringgit over the medium term.

The bank also pointed to Malaysia’s stronger economic growth, with gross domestic product expanding 6% year-on-year in the second quarter, compared with an average pre-pandemic growth pace of 4.9%.