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2026
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Standard Chartered says the ringgit and Singapore dollar will remain resilient even in a stronger US dollar environment, supported by solid fundamentals.
KUALA LUMPUR: The Malaysian ringgit is expected to remain one of the region’s better-performing currencies alongside the Singapore dollar, supported by solid economic fundamentals and impact of higher oil prices, even in a stronger US dollar environment, according to Standard Chartered Bank.
Standard Chartered ASEAN and South Asia Co-head of Foreign Exchange (FX) Research Divya Devesh said both currencies are likely to remain relatively resilient, noting that higher oil prices are more favourable for Malaysia as it is a net energy exporter.
“I think the Singapore dollar and ringgit should still perform relatively well, even in a stronger US dollar environment,” he said during Standard Chartered’s Global and ASEAN Outlook virtual briefing today.
However, Devesh said the currencies of major commodity-importing economies, particularly India, the Philippines and Thailand, are expected to underperform as they are large net commodity importers, with a stronger US dollar likely to add further pressure on their currencies.
On the broader regional outlook, he said the risk of significant foreign capital outflows from the ASEAN region appears limited, as many global investors remain underweight on the region across both debt and equity markets.
Devesh said many institutional investors have maintained an overweight position on Latin America while remaining underweight on ASEAN over the past few years, with little indication that this allocation will change in the near term.
“In a positive way, if foreign investors are already underweight, the risk of really large capital outflows from foreign investors seems limited,” he added.
Meanwhile, Standard Chartered chief economist and head of FX, ASEAN and South Asia Edward Lee said the ringgit remains fundamentally strong despite its recent sharp depreciation, attributing the weakness mainly to market positioning and temporary portfolio outflows linked to the Morgan Stanley Capital International (MSCI) index rebalancing, rather than deteriorating economic fundamentals.
“But by and large, we like the ringgit as the solid fundamentals, balance of payment continuing to improve. One point that people still miss today is Malaysia’s services balance.
“Over the last three quarters, it has recorded a surplus after being in deficit for almost 14 years,” he said.
Lee said the turnaround has been driven by stronger tourism receipts and rising services exports related to the expanding data centre industry, providing additional support to the Malaysian economy.
He also said Malaysia has weathered the global energy crisis relatively well, helped by fuel subsidies that have cushioned consumers from higher energy prices while supporting overall economic activity.
Although subsidies remain costly, Lee said Malaysia is currently in a position to sustain them, providing stability to household spending and the broader economy. Malaysia is one of those economies that have the ability to provide these subsidies for now.
He added that Malaysia isexpected to expand by about 4.5 per cent in 2026, underpinned by resilient domestic demand, sustained foreign direct investment (FDI), a robust manufacturing sector and continued growth in the data centre industry despite global uncertainties.
On the global front, its global head of research and chief strategist Eric Robertsen said the bank has revised its global growth outlook for the year down to 3.0 per cent from 3.4 per cent primarily due to the conflict-induced downgrades inWest Asia.
“The downgrade to our global growth outlook is largely a reflection of what has already happened. The outlook for the second half is really going to hinge on a couple of factors. Number one, what contributed to the resilience of the global economy.
“A big part of the contribution is derived from the outperformance of tech and artificial intelligence-related exports. It certainly contributed to the economic momentum in Asiaandto the resilience of the US economy,” he added.
