Recent forecasts for the USD to MYR exchange rate indicate a continued bearish outlook for the US dollar, primarily driven by expectations of aggressive interest rate cuts from the Federal Reserve in 2026. Following a significant drop in the US consumer inflation rate from 3% to 2.7% in November, traders are increasingly pricing in multiple rate cuts beginning in early 2026. This dovish sentiment is expected to weaken the USD further as the labor market, while resilient, shows signs of slowing growth, creating a mixed economic picture.
Amidst this USD weakness, the Malaysian ringgit (MYR) has demonstrated strong performance, appreciating over 8% throughout 2025. Positive economic indicators from Malaysia, including GDP growth exceeding expectations in Q3 2025 and the Bank Negara Malaysia's decision to maintain a stable monetary policy, have bolstered confidence in the MYR. Furthermore, improved trade relations following a reciprocal trade agreement with the US have positively influenced Malaysia's economic outlook, further supporting the ringgit's appreciation against the dollar.
The USD to MYR is currently trading at 90-day lows around 4.0770, approximately 2.2% below its 3-month average of 4.1674, showing a stable trading range between 4.0770 and 4.2305. Analysts attribute the MYR's strength to external factors, as the dollar's decline has outpaced its movements. Meanwhile, fluctuations in oil prices, while significant, have shown recent volatility, trading at 7-day highs near 62.03 and experiencing wide fluctuations between 59.04 and 70.13. Given Malaysia's position as a net oil exporter, oil prices could have indirect effects on the MYR, but the current positive trends in the domestic economy are seen as the primary driver of the ringgit's strength.
Looking ahead, continued attention to incoming US economic data and Federal Reserve communication will be crucial. Any signs of stronger inflation or unexpected economic resilience may challenge the current outlook for the USD, while ongoing economic stability in Malaysia is likely to support the MYR's strength in the near term.
