Malaysia’s currency, the Malaysian ringgit, was the perfect performer in Asia throughout 2025. On a year-over-year basis, it appreciated almost 9.7% against the US dollar, making it the best-performing currency within the region.
It outperformed the Thai baht, which rose 9.41 percent, the Singapore dollar by 5.94 percent, the New Taiwan dollar by 5.12 percent, the Chinese yuan by 4.03 percent, the South Korean won by 2.65 percent and the Vietnamese dong by just 1.15 percent.
The ringgit closed at around 4.07 per US dollar, its highest level in almost five years. This achievement also marks a big recovery from around 4.80 per dollar in March 2024, the weakest level because the 1997-1998 Asian financial crisis.
Key aspects behind empowerment
The appreciation of the ringgit is attributable to two important aspects: strong fundamentals of the domestic economy and the weakening of the US dollar in global markets.
On the domestic side, the currency is supported by strong exports, improving budget deficit and stable price conditions. Malaysia’s fiscal deficit narrowed to RM49.8 billion, or 3.3% of GDP, in the primary nine months of 2025, down from 4.1% within the previous period.
This improvement was attributable to higher revenues of the final government sector and more practical spending of subsidies after the appliance of rationalization measures.
On the external front, the U.S. Dollar Index, which measures the strength of the U.S. dollar against a basket of major trading partner currencies, is down about 9.23% year-to-date.
This dollar weakness was partly attributable to market concerns over Donald Trump’s adoption of the so-called a “big, beautiful bill” that is predicted to worsen the United States’ long-term budget deficit at a time when the national debt has reached a record US$37 trillion, or about 120 percent of GDP.
Political uncertainty can be weighing on the dollar, including Trump’s threats to interchange Jerome Powell after he resisted pressure to chop rates of interest.
Interest rate cuts by the Federal Reserve have further supported the ringgit by narrowing the rate of interest differential between the ringgit and the US dollar, which has historically affected capital flows to emerging markets corresponding to Malaysia.
The strengthening trend became clearly visible from April to May 2025, coinciding with Trump’s announcement of the “Emancipation Day” tariff. In April, the ringgit moved from 4.45 to 4.431, before strengthening again on May 5 to 4.201. The momentum returned within the fourth quarter, rising from 4.233 in mid-October to 4.0753 on December 19.
Widespread gains, with one exception
The appreciation of the ringgit was not limited to the US dollar but prolonged to most major regional currencies.
It appreciated 13.5% against the Indonesian rupiah, 10.5% against the Philippine peso, 8.5% against the Japanese yen, 5.8% against the Chinese renminbi, 3.8% against the Singapore dollar, 2.9% against the British pound and 0.3% against the Thai baht.
The only pressure got here from the euro, against which the ringgit weakened by about 2.8 to 2.99 percent. This was largely attributable to the strong appreciation of the euro, around 13.01 percent against the US dollar in the course of the 12 months.
The ringgit also entered 2026 as Asia’s strongest performing currency, signaling continued investor confidence in Malaysia’s economic prospects for the approaching 12 months.
