Ringgit's AI-export strength vs Middle East risk and equity outflows
Strong growth and AI exports support the ringgit Malaysia's economy grew 5.7% in the first half of 2026, and Goldman Sachs says the AI investment boom is boosting ringgit-linked exports and foreign investment. A stronger economy pulls money into Malaysia, so the ringgit strengthens and USDMYR falls.
This is the main force pushing the ringgit stronger and USDMYR lower.
Middle East conflict and risk-off sentiment lift the dollar Renewed US-Iran tensions and broader risk-off sentiment have pushed investors toward the US dollar, weakening the ringgit. The Middle East conflict also raises oil and commodity prices, which adds to Malaysia's inflation risk and keeps the ringgit under pressure.
This is the main force pushing USDMYR higher.
Central bank holds rate, but a future hike could support the ringgit Bank Negara Malaysia kept its policy rate at 2.75% for a seventh straight meeting, as expected. Because inflation is expected to stay high from Middle East energy costs, the market sees a possible rate hike in January 2027, which would make the ringgit more attractive and push USDMYR down.
Monetary policy is a key driver of currency strength, and the possibility of a hike supports the ringgit.
Foreign equity outflows weaken the ringgit Foreign investors have been selling Malaysian stocks, pushing USDMYR up to 4.07 for a fourth straight session of ringgit weakness. However, the central bank's cautious stance on inflation limits how much further the ringgit can fall.
Portfolio outflows are a direct, current drag on the ringgit.