Brisk ringgit transactions ensure Malaysian currency maintains high global standing
SPI Asset Management managing partner Stephen Innes said demand for transactions in ringgit would be driven by Malaysia's strong trading linkages, especially with China, Singapore and other Southeast Asian economies.
Expanding usage of ringgit for currency settlements, bilateral agreements and portfolio inflows into the domestic bond market and encouraging growth have helped sustain demand for the local note.
"This will help to keep the ringgit on the global radar," he told Bernama in an interview today.
The ringgit strengthened to as high as 4.1990 against the US dollar on May 5, 2025, appreciating by about 6.2 per cent from the start of the year, marking its strongest level in 2025.
To date, the local note was traded at 4.2475/2525 against the greenback.
Innes was responding to a report by Seasia Stats, which compiled data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), that listed the ringgit as among the top 20 most influential currencies globally.
Seasia Stats is a social media page and online platform that shares statistics and data visualisations about Southeast Asia. It covers a wide range of topics, including economics, demographics, culture, health and technology.
Innes said trade, especially in the high-growth electronics and semiconductor sector, palm oil products as well as energy would stimulate demand for the ringgit.
"Malaysia's regional financial integration also plays a significant role in enhancing the ringgit's global presence," he said.
"The growing use of local currency settlement mechanisms, supported by bilateral agreements with Indonesia, Thailand and China, has increased the operational footprint of the ringgit in cross-border trade.
"On the investment side, despite cyclical volatility -- Malaysia's bond market still attracts portfolio inflows due to its depth and relatively attractive yields," he said.
He added that this consistent interest helps sustain demand for the ringgit among global asset allocators.
Innes said Bank Negara Malaysia's ongoing efforts to upgrade financial infrastructure and promote digital payment connectivity have improved the ringgit's accessibility and efficiency in international systems.
According to Seasia Stats data, the US dollar continued to dominate international transactions with a 49.68 per cent share, followed by the euro (22.24 per cent), British pound (6.51 per cent), and Japanese yen (4.03 per cent).
The ringgit, along with the Hungarian forint and Thai baht, rounded out the top 20, each accounting for under 0.3 per cent of global usage.
Innes said the ringgit's inclusion may be modest in scale, but it reflects a significant shift in the ringgit's regional relevance.
"While its share of global transactions remains under 0.3 per cent, its presence on the list reflects more than just size — it points to Malaysia's strategic position within global trade and financial networks, particularly in the Asia Pacific.
"The ringgit may not be a reserve powerhouse, but it's increasingly being used where it counts: in trade settlement, capital flows and regional currency cooperation," he added.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the government's efforts to improve its fiscal position — which reduced the fiscal deficit to 4.5 per cent of gross domestic product (GDP) in the first quarter of 2025 from 5.7 per cent in the same period last year — have supported the ringgit's performance.
Key fiscal measures — including the increase in the sales and service tax (SST) from six per cent to eight per cent on March 1, 2024 and the diesel subsidy rationalisation implemented in June — have helped strengthen government finances.
This includes a 30.3 per cent increase in SST collection in the first quarter of 2025 and a reduction in spending on subsidies and social assistance.
"On that note, that helped improve the ringgit as foreign investors were seen as net buyers in our bond markets, especially the Malaysian Government Securities (MGS) and Government Investment Issues (GII).
He said BNM's foreign exchange reserves also rose from US$115.5 billion in January to US$120 billion at the end of June, further supporting the appreciation of the ringgit.
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