Ringgit Poised to Outperform Regional Peers Amid Middle East Unrest, Says Top Global Strategist

KUALA LUMPUR 4 March - Malaysian businesses and investors tracking the ringgit can breathe a cautious sigh of relief following the latest analysis from one of Asia’s most respected macroeconomic strategists.

Dr. Sailesh Kumar Jha, former Chief Asia Economist at Credit Suisse AG Singapore, says the ringgit is positioned to outperform several regional counterparts in the near term — even as geopolitical tensions in the Middle East continue to rattle global markets.

Speaking exclusively to DagangNews, Dr. Jha places the Malaysian ringgit (MYR) alongside the Chinese renminbi (CNH) and Singapore dollar (SGD) — a strong endorsement at a time when several Asian currencies are under depreciation pressure.

Dr. Jha, a global cross-asset market strategist with over two decades of experience, is widely recognised for his insights on Asian macroeconomics, currency dynamics, and institutional investment strategy.

Ringgit Among Asia’s Top Performers — Here’s Why

According to Dr. Jha, the US dollar index (DXY) has found a floor and is expected to trade within the 97–101 range in the first half of 2026, before potentially rising further in the second half. In such an environment, currencies with strong fundamentals and credible policies are better positioned — and the ringgit is among them.

“CNH, MYR, and SGD are likely to outperform in Asia,” he told DagangNews, drawing a clear distinction between the currencies he backs and those under pressure — notably the Indonesian rupiah (IDR), Indian rupee (INR), and South Korean won (KRW).

For Malaysian exporters, importers, and businesses with USD-denominated exposures, this relative stability is critical. A ringgit that outperforms its peers means more predictable hedging costs and less pressure on import bills — a timely signal as companies finalise their 2026 financial planning.

BNM to Hold Rates — What It Means for Borrowers and the Market

On domestic monetary policy, Dr. Jha’s message is straightforward: Bank Negara Malaysia (BNM) is expected to keep the Overnight Policy Rate (OPR) on hold for most of 2026.

This contrasts with regional peers. China, Indonesia, and Thailand are seen as candidates for rate cuts in the second half of the year, while Japan may hike.

Malaysia, by comparison, maintains a stable holding pattern — a sign of a well-anchored macroeconomic position.

For the property sector, SMEs with floating-rate loans, and businesses evaluating capital investment timing, this steady OPR outlook offers a degree of planning certainty that some neighbouring economies cannot claim.

The Oil Factor: Malaysia’s Double-Edged Sword

As a net oil and gas exporter, Malaysia holds a unique position when energy prices rise. Higher Brent crude can boost government revenues and support the ringgit — but Dr. Jha warns that the current elevated oil prices are unlikely to be sustained.

He expects Brent crude to remain broadly within the USD 77–87 per barrel range, based on his assessment that the US-Iran tensions represent a short-term geopolitical flare-up rather than a prolonged crisis. Stability, he believes, is likely to return within weeks.

“My sense is that the current volatile events in the Middle East will not be a long-drawn-out affair,” he said. “Some sort of stability should emerge in the next few weeks.”

Malaysian energy companies and Petronas-linked businesses should nonetheless monitor the downside scenario closely: if oil prices spike above USD 100–120 per barrel and hold, the macro calculus shifts significantly — and not entirely in Malaysia’s favour, given the knock-on effects on global demand, trade, and capital flows.

Three Red Flags Malaysian Businesses Must Watch

While the baseline outlook is constructive, Dr. Jha is candid about the conditions that could tip the scales.

He identifies three scenarios that could trigger significant capital outflows from Asian markets — including Malaysia — and drive broad currency weakness:

1. Brent crude sustaining above USD 100–120 per barrel for an extended period, threatening global growth and inflation simultaneously.

2. US equity markets entering a sustained bear market, triggering a global risk-off flight to safety that pressures emerging market assets.

3. The US dollar (DXY) breaking decisively above 107 while 10-year US Treasury yields hold around 5.0%, making dollar-denominated assets overwhelmingly attractive relative to Asian markets.

“Under these extreme conditions, I expect significant net portfolio outflows from Asian capital markets and notable currency depreciation pressure across most Asian currencies,” Dr. Jha warned.

For Malaysian fund managers, treasury teams, and trade finance professionals, these thresholds are concrete monitoring markers — not abstract risks.

The Bottom Line for Malaysia

Dr. Jha’s overarching message to the Malaysian business community is one of cautious optimism. The ringgit sits on the right side of the regional currency divide.

Bank Negara’s steady hand on rates provides a stable financing environment. And barring a major escalation in global risk, Malaysia’s financial markets remain insulated from the Middle East storm.

The watchwords, he advises, are vigilance and agility — because when all three red flags start flashing together, the window to reposition may be narrower than it appears. - DagangNews.com