Business · Markets · 1 hr ago
Exporter Currency Conversions May Support Malaysia’s Ringgit
Malaysian exporters may be converting more foreign earnings into ringgit, helping support the country’s currency.
The latest central bank data show business foreign-currency deposits fell 8.6% in August to 308 billion ringgit, their steepest monthly drop since 2010.
Analysts say the decline may reflect exporters converting income, including earnings from strong semiconductor shipments, though there is no official data confirming the conversions.
Malaysia is also attracting investment in semiconductor manufacturing and data centers, and the central bank encourages companies to bring foreign income home and convert it.
The ringgit rose 1.5% against the US dollar in August and remains Southeast Asia’s second-best-performing currency this year, after Singapore’s.
BNP Paribas expects these flows and other economic factors to help the ringgit reach 3.90 per dollar by June 2027, compared with about 4.08 currently.
September trade figures are due next week, and portfolio investment flows could also affect the currency.
Malaysian exporters may be converting more foreign-currency earnings into ringgit, supporting the currency, analysts say.
Foreign-currency deposits in Malaysia fell 8.6% in August to 308 billion ringgit, the sharpest monthly decline since 2010.
Malaysia’s exports rose 45% in August from a year earlier, while the ringgit gained 1.5% against the dollar that month.
BNP Paribas expects corporate conversions and foreign investment inflows to help the ringgit reach 3.90 per dollar by June 2027, from around 4.08 currently.
Bank Negara Malaysia continues to encourage state-linked and private firms to repatriate and convert foreign-currency income.
- Who
- Malaysian exporters may be converting foreign-currency earnings into ringgit. Analysts, BNP Paribas and Bank Negara Malaysia are also cited.
- What
- Increased currency conversions may support the ringgit.
- When
- Analysts expect support through the rest of 2026; BNP Paribas forecasts 3.90 per dollar by June 2027.
- Where
- Malaysia.
- Why
- Exporters may be converting foreign-currency earnings, amid strong exports and foreign investment inflows.
This story does not have two clearly opposing sides.
Malaysia’s foreign-currency deposits fell 8.6% to 308 billion ringgit, while exports rose 45% year on year and the ringgit gained 1.5% against the dollar.
The ringgit gave back some gains amid a broader rebound in the dollar.
Bank Negara Malaysia reiterated that it encourages state-linked and private firms to repatriate and convert foreign-currency income.
- Foreign-currency deposits
- 308 billion ringgit in August, down 8.6%
- Exports
- Up 45% in August from a year earlier
- Ringgit performance
- Gained 1.5% against the dollar in August
- Current exchange rate
- Around 4.08 ringgit per dollar
- BNP Paribas forecast
- 3.90 ringgit per dollar by June 2027
What people are saying
We expect corporate conversion flows to rise from onshore exporters seeking to reduce the rising FX exposure and from foreign direct investment inflows such as for the construction of data centers.
Since July there has been a fall in business foreign-currency deposits, which may point to increased conversion.
If there is a more noticeable rise in conversions, that should support the ringgit, though portfolio flows is also another important driver.