KUALA LUMPUR, March 6 (Xinhua) -- Malaysia's ringgit is expected to remain relatively resilient despite rising geopolitical risks in the Middle East, with analysts saying the currency could outperform regional peers on the back of strong economic fundamentals and robust technology-sector demand.
Maybank Investment Bank said in a note on Friday that, despite the recent conflict posing significant risks, it sees the ringgit still faring better than other peers, given that Malaysia is a net oil importer.
According to the research house, the country's strong fundamentals, current account surplus, fiscal prudence and political stability, all play a part in helping the ringgit better weather the challenging environment.
"Also, higher oil prices can actually back higher dividend payments from state-owned enterprises towards the budget," it added.
Indeed, Maybank sees strong fundamentals together with the global artificial intelligence (AI) boom placing the ringgit in pole position to outperform its regional foreign exchange peers in 2026.
For the research house, global AI capex is expected to remain strong as major economies race for technological superiority, and demand for tech exports and data centers should be a major boon for Malaysia's external position, given its integral role in the global tech supply chain.
Meanwhile, MBSB Research said in a recent note that it is keeping its baseline forecast for the ringgit to continue strengthening against the U.S. dollar.
"The primary driver for the ringgit's sustained appreciation bias is the expected narrowing of the U.S.-Malaysia interest rate differential," said the research house.
Kenanga Research, however, said in a note on Friday that it appears premature to expect de-escalation in the Middle East, and the longer oil and gas prices remain elevated, the greater the strain on energy-importing economies.
While Malaysia benefits economically from higher oil prices in the short term, it opined that the ringgit no longer behaves as a traditional oil proxy and instead trades more like a high-beta emerging market currency. ■
