Ringgit supported by Malaysia’s strong economic outlook and reform momentum, says BNM

Malaysia’s firm economic prospects and sustained reform momentum are expected to provide enduring support to the ringgit, while external factors will continue to drive exchange rate movements, said Bank Negara Malaysia (BNM). In a statement, the central bank said the ringgit strengthened against Malaysia’s major trading partners’ currencies in the first quarter of 2026 (1Q 2026), as reflected in the 1.4 per cent nominal effective exchange rate (NEER) appreciation. The local note also appreciated by 0.5 per cent against the US dollar during the quarter, despite the dollar strengthening following the onset of the West Asia conflict amid risk-off sentiment. “The ringgit’s appreciation was supported by Malaysia’s strong domestic fundamentals and growth momentum, alongside continued non-resident inflows into domestic markets. “Notwithstanding some volatility following the West Asia conflict and reduced expectations for the United States Federal Reserve policy rate cuts, the ringgit has performed well on a year-to-date basis, appreciating by 3.3 per cent against the US dollar and 2.9 per cent on a NEER basis as of May 13, 2026,” it said. BNM said it will closely monitor global developments and remains committed to ensuring the orderly functioning of the domestic foreign exchange market. Meanwhile, the central bank also reported that the financial sector continues to support the financing needs of the economy, with credit growth to the private non-financial sector rising to 5.6 per cent in 1Q 2026 (4Q 2025: 5.3 per cent) following higher growth in outstanding loans (5.6 per cent; 4Q 2026: 4.9 per cent), particularly among businesses. It said business loans expanded by 5.8 per cent in 1Q 2026 (4Q 2025: 3.9 per cent), mainly due to higher loan growth among non-small and medium enterprises (SMEs), while SME’s loan growth was broadly sustained at 6.0 per cent (4Q 2025: 5.9 per cent). For households, loan growth remained stable at 5.4 per cent in 1Q 2026 (4Q 2025: 5.5 per cent), with steady loan growth across most purposes, it added. “Growth in outstanding corporate bonds moderated to 5.8 per cent in 1Q 2026 (4Q 2025: 6.9 per cent) amid lower issuances in the quarter,” BNM said. Meanwhile, the banking sector continues to support customers through targeted and tailored measures to provide cash-flow relief, sustain business continuity, and preserve long-term financial viability. It said financial institutions are offering repayment flexibility, financing restructuring, and advisory services to help customers and SMEs manage cash flow challenges. Borrowers can also seek assistance through the Debt Management Programme and Small Debt Resolution Scheme offered by the Credit Counselling and Debt Management Agency. In addition, the RM5 billion SME Stabilisation Relief Facility (SME SRF) is now open for applications through participating financial institutions, providing timely working capital support to viable SMEs affected by the ongoing West Asia conflict, alongside efforts to strengthen long-term SME resilience through structural reforms. “BNM is working with the Credit Guarantee Corporation Malaysia Bhd (CGC) to introduce a RM10 billion guarantee scheme, which comprises six portfolio guarantee schemes addressing financial inclusion, climate and sustainability, productivity as well as resilience, and will be available to SMEs from June 1, 2026. “Further information on the scheme will be announced in due course,” it said.