Brisk transactions ensure ringgit maintains high global standing
SPI Asset Management managing partner Stephen Innes stated that demand for transactions in ringgit would be driven by Malaysia's strong trading linkages, especially with China, Singapore, and other Southeast Asian economies.
The expanding usage of the ringgit for currency settlements, bilateral agreements, and portfolio inflows into the domestic bond market, coupled with encouraging growth, have sustained demand for the local note.
"This will help to keep the ringgit on the global radar," he told Bernama in an interview on Sunday.
The ringgit strengthened to as high as 4.1990 against the US dollar on May 5, appreciating by about 6.2% from the start of the year, marking its strongest level in 2025. To date, the local note was traded at 4.2475/2525 against the greenback.
Innes was responding to a report by Seasia Stats, which compiled data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), that listed the ringgit as among the top 20 most influential currencies globally.
Seasia Stats is a social media page and online platform that shares statistics and data visualisations about Southeast Asia, covering a wide range of topics including economics, demographics, culture, health, and technology.
Innes mentioned that trade, especially in high-growth sectors like electronics and semiconductors, palm oil products, and energy, would stimulate demand for the ringgit.
"Malaysia's regional financial integration also plays a significant role in enhancing the ringgit's global presence," he said.
"The growing use of local currency settlement mechanisms, supported by bilateral agreements with Indonesia, Thailand, and China, has increased the operational footprint of the ringgit in cross-border trade. On the investment side, despite cyclical volatility, Malaysia's bond market still attracts portfolio inflows due to its depth and relatively attractive yields," he added.
Innes highlighted that this consistent interest helps sustain demand for the ringgit among global asset allocators.
He also noted that Bank Negara's ongoing efforts to upgrade financial infrastructure and promote digital payment connectivity have improved the ringgit's accessibility and efficiency in international systems.
According to Seasia Stats data, the US dollar continued to dominate international transactions with a 49.68% share, followed by the euro (22.24%), British pound (6.51%), and Japanese yen (4.03%).
The ringgit, along with the Hungarian forint and Thai baht, rounded out the top 20, each accounting for under 0.3% of global usage.
Innes remarked that the ringgit's inclusion may be modest in scale, but it reflects a significant shift in the ringgit's regional relevance.
"While its share of global transactions remains under 0.3%, its presence on the list reflects more than just size - it points to Malaysia's strategic position within global trade and financial networks, particularly in the Asia Pacific.
"The ringgit may not be a reserve powerhouse, but it's increasingly being used where it counts: in trade settlement, capital flows, and regional currency cooperation," he added.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the government's efforts to improve its fiscal position - which reduced the fiscal deficit to 4.5% of gross domestic product (GDP) in the first quarter of 2025 from 5.7% in the same period last year - have supported the ringgit's performance.
Key fiscal measures - including the increase in the sales and service tax (SST) from 6% to 8% on March 1, 2024, and the diesel subsidy rationalisation implemented in June - have helped strengthen government finances. This includes a 30.3% increase in SST collection in the first quarter of 2025 and a reduction in spending on subsidies and social assistance.
"On that note, that helped improve the ringgit as foreign investors were seen as net buyers in our bond markets, especially the Malaysian Government Securities (MGS) and Government Investment Issues (GII).
He noted that Bank Negara's foreign exchange reserves also rose from US$115.5bil in January to US$120bil at the end of June, further supporting the appreciation of the ringgit. - Bernama
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