The USD to MYR exchange rate has recently reached its 90-day lows, trading at approximately 4.0485, which is 2.7% below the three-month average of 4.16. The US dollar's decline is primarily attributed to expectations of aggressive rate cuts from the Federal Reserve in 2026. Analysts have noted a strong trend of market sentiment shifting towards a dovish stance, particularly following a softer CPI print that showcased a drop in US inflation from 3% to 2.7% in November. This situation has led to diminished demand for the dollar, which is further supported by mixed economic data from the US, indicating slowing growth yet a resilient labor market.
In contrast, the Malaysian ringgit has appreciated significantly, driven largely by the weakening US dollar and positive indicators within Malaysia's economy. The ringgit strengthened over 8% throughout 2025, benefiting from strong GDP growth that exceeded expectations in Q3 and a stable Overnight Policy Rate maintained by Bank Negara Malaysia at 3.00%. Additionally, improved trade relations following a new trade agreement with the US have enhanced Malaysia's economic outlook, providing further support for the MYR.
Market analysts also pointed out the influence of oil prices on the MYR, as Malaysia is a key exporter of oil. Currently, oil prices stand at USD 60.89, reflecting a decline of 3.9% from their three-month average of 63.35 within a notable volatile range. Fluctuations in oil prices could have a significant impact on the MYR, particularly given the country's economic dependence on oil exports.
Overall, the convergence of these factors presents a complex landscape for the USD to MYR exchange rate. The anticipated easing from the Fed alongside strong economic signals from Malaysia suggests that the ringgit may continue to perform well against the US dollar in the near term, especially if current trends in economic data persist.
