KUALA LUMPUR
The Malaysian ringgit has gained 1.03 percent against the U.S. dollar year-to-date, outperforming the Singapore dollar's 0.35 percent advance and signaling resilience among regional currencies tied to the artificial intelligence supply chain.
Frederic Neumann, chief Asia economist and co-head of HSBC Global Research Asia, attributed Malaysia's strength to a "vote of confidence by global manufacturers to use Malaysia as a global platform." The ringgit's durability reflects sustained foreign direct investment and robust electronics production, particularly in the electrical and electronics sector, which has captured a disproportionate share of global AI-related chip and data center demand.
Higher oil and gas export prices have further supported the currency. The Indonesian rupiah, by contrast, depreciated as Indonesia faces headwinds from its status as a net energy importer.
Tourism has also rebounded sharply, boosted by visa agreements with China and government infrastructure spending.
Yet concentration risk looms. Malaysia's dependence on the U.S. export market—still its largest—leaves the ringgit exposed to American trade policy shifts. Neumann cautioned that Malaysia risks becoming "a victim of its own success," with the booming E&E sector drawing capital away from small and medium enterprises and other industries.
Diversification into Latin America, Europe, and Gulf Cooperation Council markets could mitigate trade-policy risk and broaden the economic base.
