Analysts expect the ringgit to strengthen past RM4.1 per dollar, potentially hitting the highest level since May 2021, as the central bank holds rates steady and the economy gains traction, according to BNY and Malayan Banking Bhd.

Foreign investors have purchased nearly U$4 billion in Malaysian bonds this year, according to Bloomberg-compiled data, helping anchor the currency.

Malaysia’s export-driven economy is gaining from a rebound in global demand, with third-quarter growth beating expectations.

Investor sentiment has improved following a thaw in US-China trade relations – its two largest export markets – spurring renewed foreign interest in local assets.

“Ringgit sentiment continues to remain positive,” Maybank strategists led by Saktiandi Supaat wrote in a note to clients.

Momentum has built up and there is a “wall of cash that can still be converted – the large corporate foreign currency deposit holdings,” Supaat said.

The ringgit was little changed at RM4.13 per dollar in early trade.

Still, technical indicators suggest the ringgit’s rally may cool in the near-term.

Strategists forecast a temporary weakness in the currency to RM4.18 per dollar by year-end before resuming a strengthening trend in 2026, according to the median estimate in a Bloomberg survey.

Malaysia’s central bank kept interest rates unchanged earlier this month, signaling confidence in the economy’s resilience despite US tariffs.

The ringgit has climbed more than 8% this year.

The ringgit’s performance “can continue,” said Wee Khoon Chong, a senior strategist at BNY in Hong Kong.

The currency’s valuation “is attractive even after the rally in 2025, considering how weak or heavily sold ringgit was in 2021 to 2023,” Wee said.