Malaysia’s ringgit has held up better than most of its regional peers this year, a resilience that Bank Negara Malaysia (BNM) attributes to the country’s underlying economic fundamentals rather than short-term market sentiment.
Speaking to Business Times, BNM assistant governor Mohamad Ali Iqbal Abdul Khalid said sustained foreign capital allocation into Malaysia — driven in part by artificial intelligence-related investment and export growth — is expected to continue supporting the currency into the end of the year, even as emerging-market assets more broadly face external pressure.
Currency performance in context
On a year-to-date basis, the ringgit has gained roughly 1.03 percent against the US dollar, outperforming the Singapore dollar (+0.35 percent) and standing in sharp contrast to the Thai baht (-5.08 percent) and Indonesian rupiah (-7.06 percent). The currency also proved comparatively resilient during the recent Middle East conflict, a period in which regional peers came under pressure as oil prices climbed and strained wider economic conditions.
Interest in the ringgit’s stability has also fed into the country’s digital-asset space: last January, Malaysia saw the emergence of RMJDT, a ringgit-backed stablecoin designed for digital payments, reflecting how the currency’s fundamentals are being referenced beyond traditional forex markets.
According to Ali, the main downside risk to the ringgit remains external: a renewed escalation in Middle East tensions, or shifts in US Federal Reserve policy, could weigh on the currency. However, he argued that Malaysia’s structural strengths — an expanding role in the global AI supply chain, a resilient export sector and continued domestic investment — are likely to persist regardless of how external conditions evolve.
AI investment as a structural driver
Malaysia has positioned itself as a regional hub for AI and data-centre infrastructure, with companies including Google, Nvidia and Microsoft committing billions of dollars in capital to local digital infrastructure projects. Ali described this as one of the key factors currently drawing foreign investors to the country, alongside more traditional fundamentals such as trade performance and policy clarity. In Johor alone, the state is building what is described as Asia’s largest compute pipeline, with Malaysia simultaneously wiring the settlement rails needed to support it — a concrete illustration of the AI-driven capital inflows Ali referenced.
BNM has signalled that it intends to manage any currency adjustments in an orderly fashion, citing sufficient market depth and liquidity to keep volatility manageable. The central bank has also been active on the regulatory front more broadly, recently tightening digital banking transparency rules as part of a wider consumer protection push.
ASEAN local-currency settlement framework gains ground
Separately, Ali noted continued progress under the Local Currency Transaction Framework (LCTF), through which Malaysia settles a growing share of cross-border trade with Thailand and Indonesia directly in local currencies rather than via the US dollar.
The share of Malaysia’s total trade settled in Thai baht rose from 6 percent in 2009 to 17 percent in 2025, while settlement in Indonesian rupiah increased from 4 percent to 16 percent over the same period. Discussions are reportedly underway at the ASEAN level to explore extending the framework to additional member states, with Malaysia positioning its trilateral arrangement with Thailand and Indonesia as a potential template.
Twelve Malaysian banks are currently appointed as cross-currency dealers for ringgit-rupiah settlement, including Maybank, CIMB, RHB, Public Bank, HSBC Malaysia and Standard Chartered Malaysia, among others. The same institutions, plus Bangkok Bank, handle ringgit-baht settlement.
Why it matters for the region’s markets
For observers tracking capital flows and currency stability across Southeast Asia, the ringgit’s relative strength this year offers a data point on how AI-driven investment and local-currency trade settlement initiatives are reshaping regional monetary dynamics — independent of, but relevant context alongside, broader conversations about cross-border payment infrastructure in Asia.
Based on reporting by Asila Jalil, New Straits Times (August 14, 2026). Figures and quotes sourced from Bank Negara Malaysia assistant governor Mohamad Ali Iqbal Abdul Khalid, as reported in Business Times.