Kenanga Revises Ringgit Forecast To 4.08 Amid Accelerating Global De-Dollarisation
Kenanga Investment Bank has revised its year-end 2025 forecast for the Malaysian ringgit to 4.08 against the US dollar, citing accelerating structural shifts in the global monetary landscape and rising momentum in de-dollarisation efforts worldwide.
In its latest Economic Viewpoint report, the investment house highlighted that the dominance of the US dollar as the world's primary reserve currency is steadily eroding, as central banks increasingly diversify into alternative assets such as gold and even cryptocurrencies like Bitcoin (BTC). This shift, once considered a long-term trend, is now materialising more rapidly due to geopolitical risks, unsustainable US fiscal deficits, and growing global reliance on non-USD trade settlement systems.
'The USD's supremacy is no longer absolute. Central banks are diversifying away from USD reserves, gold demand is surging, and new payment systems are circumventing US financial infrastructure,' the report noted.
Ringgit's Re-Emergence in a New Currency Order
According to Kenanga, Malaysia is well-positioned to benefit from these global realignments. The ringgit, which has traded within various psychological bands over the years, is now set to re-enter a stronger trading range last seen before the COVID-19 pandemic, buoyed by Malaysia's steady current account surplus, trade resilience, and a stable policy backdrop.
It noted that the ringgit hovered in the 4.50–5.00/USD range for most of 2023 and 2024 but is likely to appreciate into the 3.50–4.00/USD band by mid-2026, if reform momentum is sustained.
This is not a tactical shift,' the report stressed. 'It reflects a reconfiguration of capital flows, remapped reserve strategies, and a growing fiscal discount on US assets.'
Regional Trade and Digital Currency Systems Gaining Ground
Malaysia's alignment with regional de-dollarisation trends was also noted, with Bank Negara Malaysia pushing for increased trade settlement in local currencies, particularly with China, Indonesia, and Thailand. Projects like the cross-border digital currency platform 'Project mBridge' are expected to reduce reliance on the US dollar while increasing monetary autonomy in Asia.
Kenanga highlighted that conducting 20% of trade in local currencies is no longer aspirational but now viewed as a strategic necessity.
Competing with Gold and Bitcoin
Despite these positives, the ringgit's upward potential now faces competition from alternative assets. Kenanga warned that capital which once flowed into emerging market currencies is now being split three ways—with gold and BTC becoming increasingly attractive hedges against inflation and systemic risk.
Gold purchases by central banks are at record highs, and BTC's inclusion in institutional portfolios following US ETF approvals is reshaping capital allocation.
'The ringgit now competes not just with the USD, but with gold, BTC, and digital alternatives,' Kenanga stated. 'Malaysia must differentiate not just through macro stability, but through reform-driven credibility, ESG alignment, and financial innovation.'
Outlook: Malaysia Could Emerge as Regional Safe Haven
Kenanga concluded that the ringgit's recent gains are not merely a product of USD weakness but reflect genuine investor interest in credible, reform-oriented markets like Malaysia.
If the US continues down a fiscally unsustainable path while Malaysia presses ahead with its National Industrial Master Plan 2030 (NIMP 2030) and structural reforms, the ringgit could be revalued as a stable proxy in Asia's emerging financial architecture.
Kenanga has also revised its forecast for the ringgit to strengthen further to 3.95/USD by end-2026.
'Malaysia's fundamentals are improving at the margin,' the report concluded. 'In a world where the USD hegemony is fading, the ringgit could quietly emerge as a relative winner.'
This bullish long-term outlook hinges on Malaysia maintaining policy credibility and accelerating reform implementation—especially in boosting productivity, supply chain integration, and attracting quality investments. Related
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