PETALING JAYA: The ringgit is expected to remain range-bound between RM4.20 and RM4.40 in the first quarter of 2025 on investor sentiment, global monetary policies and domestic economic developments.
Independent market economist Dr Suresh Rama said the US Federal Reserve’s measured pace of interest rate cuts is likely to keep the US dollar supported.
“However, given that Bank Negara Malaysia is expected to maintain its interest rates for much of 2025, the ringgit will remain within the RM4.20 to RM4.40 range in the first quarter,” he told SunBiz.
Suresh highlighted that Malaysia’s economic performance will be robust this year, with growth likely to reach the upper end of the 5.5% to 6.0% range, driven by major infrastructure projects in rail and road development that are fueling both public and private investments.
“Private consumption will remain steady, but there is a risk of reduced oil subsidies and likely electricity tariff hikes, which could temper spending.”
Suresh said US President-elect Donald Trump’s protectionist policies remain rather vague, and it cannot be assumed they will be as drastic as that during his first term. “I believe 2025 will witness stronger global growth in an environment of lower global capital costs,” he added.
Kenanga Investment Bank expects the ringgit to end 2025 at RM4.45, drawing attention to the Malaysian market and projecting the benchmark index at 1,840 points.
“The first quarter will involve a wait-and-see approach, as a cautious Asean stock market reflects uncertainties around tariff threats and higher US policy rate expectations. These conditions resemble 2018, but Malaysia is better positioned this time with stronger fundamentals and structural themes providing relative insulation,” it said.
Public Investment Bank (PIVB) predicts the ringgit will average between RM4.45 and RM4.55 throughout 2025, with Bursa Malaysia’s barometer index ending the year at 1,700 points.
“In our view, the more pressing issue is the unsustainably high US national debt. Higher risk premiums for US Treasury bonds are making borrowing costlier for the US, which could reduce funding for productive investments,“ it said.
PIVB pointed out that the US’s high budget deficit – at over 120% of gross domestic product – might necessitate significant spending cuts of up to US$2 trillion (RM9 trillion), potentially leading to public sector job losses.
“While the US dollar is unlikely to be replaced as the world’s reserve currency anytime soon, its dominance has declined from 70% in 2001 to 58% currently. Elevated bond yields suggest a stronger US dollar, which would result in a weaker ringgit in 2025,” it said.
Source: The Sun Daily
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