DBS Bank’s Group Research has lowered its forecasts for the Malaysian Ringgit (MYR) due to its strong performance against the US Dollar (USD). The report highlights recent trading trends and factors that have contributed to the strength of the MYR, indicating a positive outlook for the currency.

Forecasts For MYR

The MYR has proven to be durable against the USD, leading DBS to revise the USD/MYR forecast for the third quarter of 2026 down to 3.80. Just last week, the USD/MYR traded below 4.00, marking the first time this has happened since June 2018. The new forecast for the USD/MYR is 3.80 for the third quarter of this year. This level is historically significant, especially since it reflects the unpegging of the currency in 2005. The recent drop below the 4.00 mark is noteworthy and suggests continued strength for the Ringgit. This positive outlook is backed by strong economic fundamentals as of the end of 2025. Malaysia’s economy recorded better-than-expected GDP growth of 4.5% in the last quarter, and the country maintained a healthy trade surplus, exceeding MYR 18 billion in December 2025. These factors support the recent strength of the Ringgit. Monetary policy also favors the Ringgit. Bank Negara Malaysia kept its key interest rate steady at 3.25% in January. Meanwhile, the U.S. Federal Reserve is indicating a softer approach in the coming months. This difference in interest rates makes the Ringgit more appealing to investors.

Hedging Strategies For Businesses

Given the current momentum, it may be wise to prepare for a further decrease in USD/MYR rates. One strategy could involve buying put options on the pair to profit if it falls below current levels. The target of 3.80 seems increasingly attainable in the weeks ahead. For businesses, this is an important time to evaluate hedging strategies. Importers facing costs in USD should consider locking in favorable rates with forward contracts. On the other hand, exporters earning in USD might want to hedge their future revenues from a stronger Ringgit by purchasing USD/MYR call options. The Ringgit’s resilience is also partly due to trends in commodity markets, particularly observed in late 2025. Brent crude prices have remained stable above $85 a barrel, enhancing Malaysia’s oil and gas revenue. This external factor further supports the continued appreciation of the Ringgit. Create your live VT Markets account and start trading now.

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