Having fallen to a 26-year low in February, the currency is now less than 1% away from erasing its losses for the year.

Meanwhile, Oversea-Chinese Banking Corporation Limited (OCBC) has forecasted the ringgit to rise to RM4.60 per dollar by mid-2025.

The local currency was up 0.2% against the greenback earlier today.

The ringgit became Asia’s top performer in the past three months as Bank Negara Malaysia (BNM) encouraged state-linked firms to repatriate and convert foreign income and used forwards to support the currency.

“An upturn in the global technology cycle is also aiding export recovery, while a record discount to the US should narrow once the Fed eases policy,” said OCBC.

“We look for the ringgit to recover some lost ground when yield differential dynamics further improve as the Fed gets closer to embarking on a rate cut,” said OCBC foreign exchange strategist Christopher Wong.

“Foreign inflows into local shares, sustained recovery in the semiconductor cycle, and an eventual recovery in the Chinese economy offer further support,” he added.

He said that with US swaps pricing in a full quarter-point cut by September, an eventual Fed rate cut would buoy the local currency by making it relatively more attractive for dollar-based investors to buy ringgit-denominated assets.

“Malaysia’s policy rate is currently 250 basis points below the upper bound of the Fed fund rate,” he said.

The ringgit raced ahead of its emerging Asia peers as exports returned to positive territory in the three months ended June.

“This comes after overseas shipments contracted in 12 out of 13 straight months amid weak demand from China, the nation’s largest trading partner,” he said.

Analysts have forecasted Malaysia’s economy to continue its growth momentum after the second quarter’s gross domestic product (GDP) beat all estimates.

“That would allow the central bank to keep borrowing costs steady and offer support for the ringgit as developed countries are poised to cut rates,” he added.