Oil Prices and AI Demand Boost Ringgit Outlook, Analysts Say

Malaysian ringgit is expected to strengthen as rising oil prices and the AI boom create favorable conditions for the currency, according to strategists.

Although the ringgit fell 1.2% in September, underperforming its Asian counterparts, MUFG Bank forecasts a year‑end level of 4.03 ringgit per US dollar, while Sumitomo Mitsui Banking Corp. predicts 4.00.

The currency closed 0.3% higher at 4.0738 ringgit per dollar on Friday.

A fresh rise in oil prices is likely to lift revenues for the energy‑exporting nation, and Malaysia’s expanding position in the AI supply chain exposes it to growing semiconductor demand. Meanwhile, political risk premiums linked to upcoming state elections are easing, leading strategists to anticipate a resumption of the ringgit’s upward trend.

“We could see a relief rally in the ringgit toward year‑end as macro‑environment concerns ease,” said Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking Corp. in Singapore. “Malaysia’s fundamentals remain positive,” he added, citing its energy and electronics exports and the impact of a stronger Chinese yuan.

Exports have risen over 35% year‑on‑year for each of the past five months through August, driven by electronic shipments that include semiconductors. Annual export growth averaged roughly 6.7% in 2025. Malaysia now ranks among the world’s four largest net exporters of AI‑related hardware, together with South Korea, Taiwan and Thailand, the International Monetary Fund says.

“Malaysia’s electronics trade surplus has helped offset the higher oil import bill,” said Lloyd Chan, a foreign‑exchange strategist at MUFG in Singapore. “We see room for ringgit strength,” he added, citing favorable sovereign bond and currency valuations.

The ringgit’s real effective exchange rate sits roughly 2% below its 20‑year average, per Bank for International Settlements data. Ongoing bond inflows could provide further support to the currency.

Investors will monitor September’s S&P Malaysia manufacturing PMI, due Thursday, for additional signals of economic expansion amid regional uncertainties linked to the Middle East. Nevertheless, Malaysia’s position as a leading exporter of liquefied natural gas may afford it stronger resilience to higher energy costs compared with some regional peers.

“Malaysia has been on the right side of the terms‑of‑trade story throughout the year,” Goldman Sachs Group Inc. strategists, including Danny Suwanapruti, wrote in a Sept. 18 note, highlighting its strong positioning to benefit from AI investment and higher energy prices.

With the central bank adopting a slightly more hawkish stance, “the conditions are set for the ringgit to outperform,” they said, recommending a long ringgit/baht trade. – Bloomberg

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