Malaysian Ringgit's Strength Shows How Weak USD Can Boost Asia FX

By Ying Xian Wong

KUALA LUMPUR, Malaysia--Malaysia's ringgit continued to trade at an eight-year high versus the dollar, highlighting the boost Asian currencies can get from a softer greenback.

The U.S. dollar weakened 0.8% against the ringgit early Wednesday, hovering around levels not seen since 2018, LSEG data showed.

That followed the greenback's slide overnight after comments from President Trump stoked speculation that the U.S. wouldn't mind having a weaker dollar, which could make American exports more competitive at a time when the country is trying to even out its trade imbalances.

The U.S. is the biggest export market for many Asian economies, which got hit with some of the steepest tariffs under the Trump administration's rollout of duties on imported goods last year.

The dollar's slump has given Asian FX a boost this week, with currencies like the Singapore dollar hitting multi-year highs. A further lift has come from the recovery of the yen, as speculation about intervention helps the Japanese currency stabilize after a run of depreciation.

Currencies like the Korean won and the Thai baht tend to react positively to yen strength, Barclays strategists and economists said in a note.

Looking at past episodes of yen appreciation, they assess that the ringgit, baht and Indonesian rupiah rallied the most in Asia against the dollar during the period that coincided with FX intervention in July 2024. During intervention in May of the same year, the won and the Singapore dollar strengthened the most, according to the report by Mitul Kotecha and others at Barclays.

That suggests that idiosyncratic factors are also very important for Asian currencies, they added.

For the ringgit, economic reforms and healthy growth have played a part in the currency's strength, said iFast Capital assistant manager Kevin Khaw Khai Sheng.

For the rupiah, policymakers' resolve to maintain price levels stable will be a key driver, OCBC strategists said.

The won, meanwhile, has room for further recovery--barring any hawkish surprise from the Federal Reserve, or USD bulls, OCBC's Sim Moh Siong and Christopher Wong said.

Focus will remain on how the dollar-yen story unfolds, and how policymakers in Asia react to the domino effect on their respective currencies.

Officials in economies including South Korea, Thailand and Indonesia have vowed to keep a close watch on forex market moves, and Malaysian Prime Minister Anwar Ibrahim has acknowledged it would be preferable for the ringgit to strengthen gradually.

Write to Ying Xian Wong at yingxian.wong@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com

(END) Dow Jones Newswires

January 27, 2026 23:57 ET (04:57 GMT)