Kenanga Investment Bank Reaffirms Ringgit Forecast at RM3.95 Against the US Dollar by Year-End, Citing Resilient Fundamentals

KUALA LUMPUR, August 17, 2026 — Currency volatility linked to geopolitical uncertainty and shifting monetary policy expectations has kept Asian emerging-market currencies under pressure in 2026, with the Malaysian ringgit navigating a complex global backdrop shaped by US fiscal dynamics, Middle East tensions, and an increasingly cautious US Federal Reserve. Against this environment, Kenanga Investment Bank Bhd has reaffirmed its ringgit forecast of RM3.95 to the US dollar by year-end, maintaining a constructive medium-term outlook grounded in Malaysia’s domestic fundamentals.

Kenanga Investment Bank Officially Reaffirms RM3.95 Ringgit Forecast in Latest Research Release

Kenanga Investment Bank Bhd (Kenanga IB) formally announced its unchanged ringgit year-end target of RM3.95 against the US dollar in a research note published on August 17, 2026. The investment bank, a licensed financial institution operating under the regulatory framework of Malaysia’s securities and capital markets authority, stated that its constructive medium-term stance on the ringgit remains intact despite near-term headwinds from a stronger US dollar.

Kenanga IB’s research team states that “the US dollar’s elevated level looks increasingly like a temporary risk-premium bump rather than a new trend,” attributing the greenback’s recent strength to two key factors: heightened market anxiety over Middle East geopolitical developments and financial markets pricing in delayed US Federal Reserve rate cuts alongside a residual probability of further rate hikes.

The bank notes that the structural case for a weaker US dollar over time — supported by global reserve diversification, persistently wide US fiscal deficits, and gradual portfolio reallocation away from dollar-denominated assets — is expected to reassert itself once the Fed transitions from its current pause to an active easing cycle.

Ringgit Supported by Current Account Surplus, Record Foreign-Currency Deposits, and Domestic Growth Momentum

According to Kenanga IB’s research note, three core pillars underpin its RM3.95 year-end ringgit target: resilient GDP growth, a sustained current account (CA) surplus, and record foreign-currency deposit levels held within Malaysia’s banking system.

The bank’s research highlights that Malaysia’s ringgit nominal effective exchange rate (NEER) declined 0.8 per cent in the second quarter of 2026 (Q2 2026), even as the US dollar/ringgit currency pair held broadly steady during the same period — a dynamic the bank describes as reflecting some trade-weighted weakness in the ringgit rather than a bilateral deterioration against the greenback specifically.

Despite this trade-weighted softness, Kenanga IB maintains that the combination of a durable current account surplus and strong foreign-currency deposit inflows continues to provide a structural support base for the ringgit. The bank’s research note concludes that RM3.95 remains “the likelier outcome” for the ringgit by the close of 2026.

On monetary policy, Kenanga IB projects that Bank Negara Malaysia will hold the overnight policy rate (OPR) at 2.75 per cent through the remainder of 2026. The bank notes that inflation, while rising at the headline level, remains contained enough to keep pre-emptive tightening off the policy agenda. Headline inflation climbed to 1.9 per cent in Q2 2026, up from 1.6 per cent in Q1 2026, driven primarily by a jump in fuel inflation to 5.0 per cent as RON97 and diesel prices moved higher. Core inflation, by contrast, eased to 1.9 per cent in Q2 2026, down from 2.1 per cent in Q1 2026.

Apex Securities Also Targets RM3.95 Ringgit Level, Flags Upside GDP Risk That Could Prompt Policy Reassessment

A segment of the Malaysian investment research community tracking ringgit exchange rate direction and Bank Negara Malaysia policy trajectory has converged on a broadly shared outlook for year-end 2026. Apex Securities Bhd separately confirmed that it also expects Bank Negara Malaysia to maintain the OPR at 2.75 per cent through 2026, citing the central bank’s likely adoption of a wait-and-see approach as it assesses rising economic headwinds in the second half of the year.

According to Apex Securities, its 2026 baseline GDP growth forecast stands at 5.0 per cent year-on-year, with a corresponding full-year inflation forecast of 2.0 per cent — both figures falling within Bank Negara Malaysia’s current official projection range.

However, Apex Securities flagged an important upside risk: with Malaysia’s full-year GDP growth potentially reaching between 5.1 per cent and 5.5 per cent year-on-year — above the central bank’s stated forecast range — the stronger-than-expected economic performance recorded in the first half of 2026 has raised the prospect of a policy rate hike. Q2 2026 GDP growth came in at 6.0 per cent, a figure that already exceeded Bank Negara’s full-year 2026 guidance range of 4.0 to 5.0 per cent.

Kenanga IB noted that Bank Negara is expected to look through the current cost shock and preserve policy flexibility unless stronger growth momentum or inflation pressures trigger persistent second-round price effects across the broader economy.

Frequently Asked Questions About Kenanga Investment Bank’s Ringgit Forecast and Malaysia’s 2026 Monetary Outlook

What is Kenanga Investment Bank’s ringgit forecast for year-end 2026? Kenanga Investment Bank Bhd (Kenanga IB) has reaffirmed its ringgit year-end forecast of RM3.95 to the US dollar, as stated in its research note published on August 17, 2026.

Why is the US dollar currently strong against the ringgit? Kenanga IB attributes the US dollar’s current strength to Middle East geopolitical tensions and financial markets adjusting their expectations for US Federal Reserve rate cuts, while also pricing in a residual probability of further rate hikes.

What is the long-term outlook for the US dollar according to Kenanga IB? Kenanga IB states that the structural case for a weaker US dollar over time remains intact, supported by global reserve diversification, persistently wide US fiscal deficits, and gradual portfolio reallocation — factors expected to exert downward pressure on the dollar once the US Federal Reserve begins active easing.

What factors support the ringgit reaching RM3.95 by year-end? According to Kenanga IB’s research, the three primary supportive factors are Malaysia’s resilient GDP growth, a sustained current account surplus, and record foreign-currency deposit levels held within the Malaysian banking system.

What is Bank Negara Malaysia’s expected OPR decision for 2026? Both Kenanga IB and Apex Securities Bhd expect Bank Negara Malaysia to hold the overnight policy rate (OPR) at 2.75 per cent through the end of 2026, with the central bank expected to adopt a wait-and-see approach in assessing second-half economic conditions.

What was Malaysia’s GDP growth rate in Q2 2026? Malaysia recorded GDP growth of 6.0 per cent in the second quarter of 2026 (Q2 2026), a figure that exceeded Bank Negara Malaysia’s full-year 2026 guidance range of 4.0 to 5.0 per cent.

Could Malaysia’s GDP growth trigger an OPR rate hike in 2026? Apex Securities Bhd notes that if full-year 2026 GDP growth reaches between 5.1 per cent and 5.5 per cent year-on-year — above Bank Negara’s current forecast range — the stronger-than-expected performance raises the prospect of a rate hike, though both Kenanga IB and Apex Securities maintain their base case of an unchanged OPR at 2.75 per cent through year-end.

What was Malaysia’s headline inflation rate in Q2 2026? Malaysia’s headline inflation rose to 1.9 per cent in Q2 2026, up from 1.6 per cent in Q1 2026, largely driven by a jump in fuel inflation to 5.0 per cent as RON97 and diesel prices moved higher. Core inflation, however, eased to 1.9 per cent in Q2 2026 from 2.1 per cent in Q1 2026.

Kenanga IB’s Medium-Term Ringgit Outlook Reflects Confidence in Malaysia’s Macroeconomic Fundamentals

As global currency markets weigh the timing and pace of US Federal Reserve monetary easing against persistent geopolitical risk premiums, Kenanga Investment Bank Bhd’s reaffirmation of its RM3.95 ringgit target for year-end 2026 reflects the investment bank’s assessment that Malaysia’s domestic macroeconomic fundamentals — including a current account surplus, robust GDP growth, and stable monetary policy — provide a credible foundation for ringgit stability and measured appreciation over the medium term. Apex Securities Bhd’s aligned OPR and GDP forecasts further reinforce the prevailing consensus among Malaysian investment research institutions heading into the second half of 2026.

This article is based on Kenanga Investment Bank Bhd’s research note released on August 17, 2026, and public statements by Apex Securities Bhd. For further information on Kenanga Investment Bank Bhd’s research publications and financial services, readers may visit the official Kenanga IB website or contact the institution through its official Kuala Lumpur headquarters channels.