The ringgit appreciated as much as 1% to RM3.9678 per US dollar today, the strongest since May 2018.
The FTSE Bursa Malaysia KLCI Index (FBM KLCI) rose as much as 1.2%.
Local assets are rallying alongside other emerging markets amid a selloff in the dollar sparked by concerns over joint intervention.
Malaysia’s growth momentum is also expected to continue this year, supported by resilient domestic demand, likely strong tourist arrivals and a rapid expansion in the data-centre sector.
T Rowe Price is most constructive over the ringgit within the emerging-Asia FX space, given that it’s a “destination for data centres with ample energy resources and is doing well in terms of tourism,” said Leonard Kwan, a fixed-income fund manager in Hong Kong.
The ringgit is Asia’s top performing currency so far in January, following two years of outperformance in the region.
A strategist at Oversea-Chinese Banking Corp sees the ringgit potentially strengthening toward the RM3.9650 level, supported by gains in the yuan and yen, while Gama Asset Management SA expects the currency to rise to RM3.9 per dollar this quarter.
Tech exports, foreign direct investment and Bank Negara Malaysia likely keeping interest rates unchanged this year would help the ringgit outperform Southeast Asian peers again in 2026, Goldman Sachs strategists including Danny Suwanapruti wrote in a note on Saturday.
The central bank maintained its policy rate last week.
The return of foreign investors is also giving equities a boost.
Global funds bought US$256 million of local stocks on a net basis this month – the most among emerging regional peers – helping to lift the FBM KLCI gauge to the highest since 2018.
“Steady fiscal trajectory and stable economic growth have positioned the country as an attractive destination for foreign investment, particularly in infrastructure, financial services, and renewable energy,” said Tareck Horchani, head of prime brokerage dealing at Maybank Securities in Singapore.
“Banking stocks have been the main driver for the index amid bargain hunting,” Horchani said.
The Bursa Malaysia Finance Index advanced as much as 1.7% to a fresh record high.
This week’s main economic events include Singapore’s industrial production, China’s industrial profits, the Philippines’ trade data, Australia’s Q4/December CPI, the Philippines’ Q4 GDP, Australia’s Q4 PPI, Taiwan’s Q4 GDP, Thailand’s trade data and China’s manufacturing PMI.