MBSB IB To Keep Ringgit's Average Forecast Around 4.00 vs US Dollar In 2026

KUALA LUMPUR, March 3 (Bernama) -- MBSB Investment Bank Bhd (MBSB IB) is keeping its baseline forecast for the ringgit to continue to strengthen further against the US dollar, averaging in 2026 to around RM4.00 (2025: RM4.28). 

It said the primary driver for the ringgit's sustained appreciation bias is the expected narrowing of the United States (US)-Malaysia interest rate differential. 

“Our baseline assumes two -25 basis points (bps) cuts by the US Federal Reserve (Fed) this year, contrasting with a neutral hold at 2.75 per cent for Malaysia's Overnight Policy Rate (OPR). 

“We expect the ringgit to experience volatility as markets recalibrate for every Fed move," it said in a research note.

The investment bank also said elevated US inflation and global geopolitical risks remain the ‘wildcards’ in its forecast. 

Should these risks materialise, the Fed may delay its easing cycle, creating a significant headwind that could cap the ringgit’s strengthening trend, it said. 

Over the past month, the ringgit’s appreciation bias has continued, bolstered by a series of robust economic data releases. 

The currency has maintained its strength even in the face of a rebounding US dollar index (DXY), successfully breaching the RM3.90 level. 

This outperformance was supported by the market's confidence in Malaysia’s domestic recovery. 

“However, if the ringgit were to strengthen further from the current level and at a sustainable level, we will readjust our expectation on a stronger bias. 

"Broadly, we project the MBSB Trade-Weighted Ringgit Index (TWRI) to climb to 102.0 by year-end 2026 (end-2025: 98.4), reflecting the ringgit's broad-based strength against major trading partners’ currencies," it said. 

This resilience is anchored by Malaysia's stable monetary policy and robust economic growth, a stark contrast to other central banks that have pivoted toward dovish stances to stimulate their economies. 

Supported by Bank Negara Malaysia's assessment of sustained domestic expansion, this favourable macroeconomic backdrop remains a primary catalyst for the ringgit’s outperformance against regional and global peers, it added.

-- BERNAMA