Ringgit opens higher as Budget’s fiscal discipline boosts sentiment

KUALA LUMPUR, 12 OCTOBER 2026 —

KUALA LUMPUR, Oct 12 – The Malaysian ringgit opened the day at 4.0820/4.0880 against the U.S. dollar, a modest gain from Friday’s close of 4.0830/4.0875, as markets reacted to the government’s pledge of fiscal discipline following the tabling of Budget 2027.

The move was supported by a broader rally against a basket of major and ASEAN currencies, with the ringgit strengthening against the British pound, euro, Singapore dollar, Thai baht and Indonesian rupiah, while slipping marginally against the Japanese yen and holding steady against the Philippine peso.

The rally was underpinned by comments from Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid, who said the government’s commitment to fiscal discipline was reflected in its target to narrow the fiscal deficit to 3.3 % of gross domestic product (GDP) in 2027, down from an estimated 3.6 % this year. He added that the pragmatic approach should help preserve Malaysia’s sovereign credit rating, providing firm support for the ringgit.

Rashid warned that external conditions remained uncertain, particularly developments in the Middle East and their potential impact on global crude oil prices. “Hence, attention will be on whether the U.S. Federal Reserve will consider raising interest rates further this month,” he told Bernama. “Therefore, we expect the ringgit‑U.S. dollar pair to maintain its tight‑range bias today.”

At the opening, the ringgit traded higher against the British pound, moving to 5.4038/5.4117 from 5.4063/5.4123 at Friday’s close. Against the euro, it rose to 4.5735/4.5802 from 4.5807/4.5858 previously. The local note weakened against the Japanese yen, trading at 2.5806/2.5846 from 2.5791/2.5821 on Friday. Against ASEAN currencies, the ringgit edged up against the Singapore dollar to 3.1876/3.1928 from 3.1896/3.1934 at Friday’s close and the Thai baht to 12.1720/12.1957 from 12.1735/12.1909 previously.

The local note also ticked up against the Indonesian rupiah to 228.0/228.4 from 228.1/228.4 at Friday’s close, while remaining unchanged against the Philippine peso at 6.50/6.51.

The market reaction followed the announcement of Budget 2027 on Friday, which highlighted a fiscal plan aimed at reducing the deficit and maintaining macro‑economic stability. The budget’s focus on fiscal prudence was seen as a positive signal for investors, reinforcing confidence in Malaysia’s economic management and its creditworthiness. The ringgit’s modest gains reflect the market’s assessment that the government’s fiscal targets are credible and that the country’s sovereign rating is likely to remain intact.

The Bank Muamalat economist’s remarks underscored the importance of external factors, particularly oil price volatility driven by Middle Eastern developments, and the potential for further U.S. Federal Reserve rate hikes. These uncertainties were acknowledged as key variables that could influence the ringgit’s trajectory in the short term. Nonetheless, the prevailing sentiment was that the ringgit would stay within a tight range against the dollar, buoyed by the domestic fiscal outlook.

In the broader regional context, the ringgit’s performance against ASEAN currencies mirrored a general strengthening of the Malaysian currency relative to its neighbours. The slight appreciation against the Singapore dollar and Thai baht suggests a relative improvement in Malaysia’s trade and investment position, while the unchanged rate against the Philippine peso indicates a stable relationship with that market.

The day’s movements were confined to the opening session, with no further significant shifts reported in the source. The market’s focus remains on the government’s fiscal trajectory and external economic conditions, particularly oil prices and U.S. monetary policy, which will shape the ringgit’s path in the coming days.

Related: Bank Muamalat Malaysia Bhd · Dr Mohd Afzanizam Abdul Rashid