SEPTEMBER 14 — The ringgit opened stronger this week on renewed hopes that the United States Federal Reserve may soon cut interest rates. 

While financial markets often interpret such news in the narrow lens of currency speculation, the implications for Malaysia go much deeper. 

A firmer ringgit is not just about a temporary reprieve against the US dollar. It is a reflection of growing resilience in the Malaysian economy, particularly within the larger Asean landscape.

The ringgit and market confidence

For much of the past two years, the ringgit had been under pressure, trading at historically weak levels against the greenback.

Investors were quick to cite Malaysia’s fiscal constraints, its modest tax base, and the uncertainties of global demand as vulnerabilities. 

Yet the currency’s rebound suggests that the fundamentals of Malaysia’s economy remain intact. In fact, the external pressure of tariffs, supply chain realignments, and US rate hikes has forced Malaysia to innovate and diversify.

The latest movement in the ringgit demonstrates that foreign exchange markets are beginning to price in Malaysia’s long-term advantages: a robust manufacturing base, an expanding semiconductor ecosystem, and a steady inflow of foreign direct investments. 

In other words, the ringgit’s strength is not accidental but linked to Malaysia’s structural capacity to ride the wave of Asean’s economic rise.

Malaysia’s position within Asean is a critical buffer. Intra-Asean trade, while still standing at less than 25 per cent, it is expanding rapidly under the Regional Comprehensive Economic Partnership (RCEP).

Asean’s total GDP now surpasses US$4 trillion, making it the fifth-largest economy globally. With Malaysia as chair of Asean in 2025, the ringgit’s stability signals not just national resilience but regional credibility.

This is vital in a time when external shocks — such as Trump’s aggressive tariff policies or China’s slowing economy — could have otherwise rattled Asean markets. Instead, Malaysia’s capacity to anchor trade negotiations, manage investor confidence, and safeguard supply chains underscores its role as a stabiliser within the grouping. The Ringgit, therefore, is both a barometer and a message: Asean economies, when driven by pragmatism and resilience, can withstand global headwinds.

Building on economic resilience

To be sure, a stronger currency is not without its challenges. Exporters may feel the pinch as their goods become relatively more expensive abroad. But this is where Malaysia’s broader economic transformation comes into play. The National Semiconductor Strategy, for instance, is designed not just to expand output but to move Malaysia up the value chain in design, research, and innovation.

Similarly, Malaysia’s steady progress in digitalisation, renewable energy, and Islamic finance provides multiple levers of growth that do not rely solely on cheap exports. By cultivating high-skilled human capital — 60,000 engineers targeted under the semiconductor initiative alone — Malaysia is preparing to thrive in a knowledge-based economy where currency fluctuations matter less than value-added competitiveness.

A regional signal of strength

A firm ringgit also sends a wider geopolitical signal. It tells Asean’s neighbours and external partners that Malaysia is not simply a passive player buffeted by US–China tensions. Rather, it is carving out a position of strategic resilience — able to engage both powers while strengthening ties with the GCC, Brics, and Japan. As Asean hosts the East Asia Summit later this year, Malaysia’s financial stability will be under close watch.

The symbolism is powerful: when the ringgit strengthens, it suggests that markets see Malaysia not as fragile but as adaptive. And when Malaysia strengthens, so too does Asean’s credibility as a region capable of steering through crises.

From fragility to resilience

Currencies rise and fall every day, but what matters is the underlying story they tell. For Malaysia, the ringgit’s firming is more than a short-term response to a possible Fed rate cut. It is evidence of a deeper resilience — an economy that has learned to adapt, innovate, and lead within Asean.

As the region enters a turbulent decade of shifting supply chains, tariff wars, and great-power rivalry, Malaysia’s ringgit serves as a quiet yet significant marker. It tells us that Malaysia, and by extension Asean, has the capacity not only to endure shocks but to emerge stronger from them.

*Phar Kim Beng, PhD, is Professor of Asean Studies and Director of the Institute of International and Asean Studies (IINTAS) at the International Islamic University of Malaysia.

**This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.