MUFG warns domestic political uncertainty may weaken the Ringgit despite strong fundamentals and external demand.
Malaysia’s Ringgit is under near-term pressure due to rising domestic political risks, even as solid growth and low inflation support the currency. High US yields, Middle East tensions, and state election outcomes could add volatility and a risk premium to USD/MYR in coming months.
The country’s strong external sector, contained inflation, and prudent policymaking are expected to limit disorderly depreciation. Authorities have also shown willingness to intervene, including measures to boost export conversion and repatriation flows if needed.
While geopolitical risks in the Middle East remain a concern, MUFG expects the conflict to stay contained. However, oil supply disruptions could delay Fed easing, keeping global inflation concerns elevated.