JANUARY 24 — Currency markets rarely move on sentiment alone. When the Malaysian ringgit briefly breached the 4.00 level against the US dollar on January 23 — touching 3.9992, its strongest point since 2018 — it was not merely a technical milestone. It was a quiet signal from the markets that something deeper is shifting in Malaysia’s economic story.

For traders, the numbers matter. For the man on the street, however, the question is simpler: what does a stronger ringgit mean for me?

In practical terms, it means imported goods cost less — or at least stop becoming more expensive. Food items that rely on foreign inputs, medicines, school supplies, spare parts for cars, even the smartphones we all carry, are priced in foreign currencies.

When the ringgit strengthens, price pressures ease. Inflation does not vanish, but it stops biting as sharply. For households still adjusting to post-pandemic realities, that matters.

The ringgit has appreciated about 1.5%, outperforming several regional peers. Economists had expected stability in the first half of 2026 before further gains later in the year. That the ringgit reached this level earlier than anticipated suggests that investors are reassessing Malaysia’s fundamentals more favourably than before.

Globally, expectations that the US Federal Reserve will cut interest rates have weakened the US dollar, giving emerging market currencies, including the ringgit, a lift. Economists note that the greenback’s decline reflects long‑standing pressures on its privileged international role, dating back to the post‑World War II monetary system, as well as renewed bets on Fed easing in 2026.

Malaysian Economist Jomo Sundram observes: “Many Malaysians wrongly believe the ringgit’s strength reflects the economy’s strength. The US dollar has long been overvalued due to its privileged status in the international monetary system since WW2, but this has been declining ever since. President Trump hopes to make US manufacturing more viable by weakening the dollar.”

That said, Malaysia’s domestic fundamentals also play a role. Bank Negara Malaysia’s stability-focused policies, ongoing fiscal reforms, and a resilient growth trajectory have bolstered investor confidence. Trade performance, steady portfolio inflows, and stable macroeconomic indicators have further supported the ringgit. Still, experts caution that these gains could be temporary if global monetary conditions shift.

Behind this renewed confidence lies a clearer policy direction under Prime Minister Datuk Seri Anwar Ibrahim. Since taking office, Anwar has focused on restoring economic credibility — a phrase often used in boardrooms but felt most keenly in daily life. Fiscal discipline matters because it keeps subsidies targeted. Institutional independence matters because it keeps inflation in check. These are not abstract concepts; they shape the cost of living.

The government’s gradual rationalisation of subsidies, particularly fuel subsidies, has aimed to ensure assistance reaches those who need it most without draining public finances. At the same time, reaffirming the independence of Bank Negara Malaysia has reassured markets — and households — that monetary policy decisions are made with stability, not politics, in mind.

The government has also moved to restore fiscal credibility through tighter spending controls, tax reforms, and targeted subsidies, while reaffirming the independence of Bank Negara Malaysia to anchor monetary stability.

At the same time, Malaysia is attracting high-value foreign investment in advanced industries, sustaining trade surpluses, and deepening financial markets — strengthening the foundations that support a more resilient ringgit.

Foreign investment, too, has a human dimension. Under frameworks such as the MADANI economy, the New Industrial Master Plan 2030, and the National Energy Transition Roadmap, Malaysia has attracted investments into semiconductors, data centres, renewable energy and advanced manufacturing. These are not just headline numbers. They translate into jobs, better wages, supplier opportunities for SMEs, and, ultimately, stronger foreign currency inflows that support the ringgit.

When the ringgit holds its ground, small businesses importing machinery or raw materials face fewer cost shocks. Students studying abroad worry less about exchange rates. Families planning overseas travel or medical treatment find their budgets stretched a little less. These may seem incremental, but collectively they shape confidence — the same confidence that fuels domestic spending and investment.

History offers perspective. In earlier decades, when Malaysia was a net earner of foreign currency through manufacturing and exports, the ringgit was stronger and growth more broadly shared. While today’s global economy is far more complex, the principle remains: countries that earn, invest and save well tend to have currencies that reflect that strength over time.

Bank Negara Malaysia has consistently cautioned that currency movements reflect both short-term volatility and long-term fundamentals. Its role is not to defend a particular level, but to ensure orderly markets while deeper reforms take effect. Ultimately, no central bank intervention can substitute for productivity, competitiveness and good governance.

The ringgit’s recent gains — not only against the US dollar, but also against the yen, euro, pound, and regional currencies — suggest a broader recalibration of Malaysia’s prospects. Volatility will not disappear. But direction matters.

For the man on the street, a stronger ringgit is not about currency pride or market bravado. It is about stability. About prices that stop climbing so fast. About wages that stretch a little further. About a sense that the economy is, quietly and steadily, finding its footing again.

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