--- title: "Why is the Ringgit Rising?" description: "Discover why the Ringgit is on the rise! Bank Negara Malaysia's measures, economic growth, and global factors are boosting the currency's value. Read more now!" url: "https://www.mrmoneytv.com/articles/why-is-the-ringgit-rising/" category: "Financial News" author: "Finlit" published: 2024-08-22 source: "Mr Money TV" --- # Why is the Ringgit Rising? Discover why the Ringgit is on the rise! Bank Negara Malaysia's measures, economic growth, and global factors are boosting the currency's value. Read more now! ## Key takeaways - Bank Negara Malaysia encouraged government-related companies, corporations, exporters and investors to convert their foreign exchange income into Ringgit, and that extra demand helped the currency appreciate 2.8% month-on-month by mid-2024. - Holding the Overnight Policy Rate steady at 3% made Malaysian assets more attractive to investors and helped keep inflation in check, both of which supported the Ringgit. - A weakening US Dollar did the Ringgit a favour: the Dollar Index fell 2.01% on soft US data and expectations that the Federal Reserve would cut rates in September. - The narrowing gap between Malaysia's 10-year MGS yield and US Treasury yields drew more foreign money into Malaysian equity and bonds, adding to Ringgit demand. - Malaysia's economy was projected to grow 5.8% in the second quarter of 2024 with inflation at just 2%, and stronger electrical and electronics exports brought in more foreign receipts. - These figures are a mid-2024 snapshot tied to that year's rate expectations and forex measures, so treat them as a moment in time rather than the Ringgit's current position. If you’ve been [paying attention to the news](https://www.thestar.com.my/business/business-news/2024/08/21/ringgit-rises-as-us-index-declines-on-fed-rate-cut-hopes), you may have heard that the Malaysian Ringgit has been on the rise. Just a few months ago, headlines were all about the [Ringgit hitting record lows](https://www.nst.com.my/business/economy/2024/02/1009228/ringgit-hits-new-all-time-low-35418-against-singapore-dollar) against the US Dollar and Singapore Dollar. However, it’s making a bit of a comeback, and that’s caught a lot of people’s attention. In this article, we do a short breakdown of why the value of Ringgit is finally appreciating.   ## Reasons for the Ringgit Rising ### 1\. **BNM’s Foreign Exchange Conversion Measures** Bank Negara Malaysia (BNM) implemented measures to encourage the conversion of foreign exchange income held by government-related companies, corporations, exporters, and investors into Ringgit. This [increased demand for the Ringgit](https://theedgemalaysia.com/node/713003) in the foreign exchange market, leading to its appreciation. In the first quarter of 2024 alone, Malaysia saw a notable increase in foreign exchange conversions compared to the previous year. This influx has strengthened the local currency, making [it one of the best-performing currencies in the region](https://www.nst.com.my/business/economy/2024/05/1055510/ringgit-top-performer-among-10-regional-currencies-mid-may-mof). By mid-2024, the Ringgit had appreciated by 2.8% month-on-month, reflecting the impact of these conversion measures. ### 2\. Favourable Domestic and External Factors The Ringgit has benefited from a combination of favourable domestic policies and external factors, particularly under the Malaysian government’s Madani framework, which emphasises sustainability, innovation, and prosperity. This economic approach aims to enhance the country’s macroeconomic fundamentals. The government’s commitment to strengthening the Ringgit is evident in its efforts to liberalise foreign exchange policies and [boost demand for the Ringgit in the international market](https://www.nst.com.my/business/economy/2024/08/1089337/anwar-strengthening-ringgit-will-enhance-foreign-investor). The focus on improving economic capacity and infrastructure aligns with the long-term vision of the Madani government, which seeks to create a more resilient and competitive economy. ### 3\. Stable Monetary Policy [Bank Negara Malaysia’s decision to maintain the Overnight Policy Rate (OPR) at 3%](https://www.freemalaysiatoday.com/category/nation/2024/05/09/bnm-keeps-opr-at-3-to-support-economic-growth/) has been another a key factor in stabilising the Ringgit. By keeping interest rates steady, BNM has made Malaysian assets more attractive to investors, boosting demand for the Ringgit. This policy also helps control inflation, ensuring that the Ringgit retains its purchasing power. Additionally, the consistency in monetary policy fosters investor confidence, which further supports the Ringgit’s value in the global market. Overall, this stable approach has contributed to the Ringgit’s recent strength. ### 4\. Increased Foreign Investments There has been a rise in foreign investments in Malaysian equity, which has further strengthened the Ringgit. The narrowing gap between Malaysia’s 10-year Malaysian Government Securities (MGS) yield and US Treasury yields, combined with expectations of US interest rate cuts, have made the Ringgit more attractive to investors. As the gap between Malaysian and US interest rates narrows, Malaysian assets become more appealing to both domestic and international investors. This is because the relative returns on Malaysian bonds ### 5\. Weakening of the US Dollar The [US Dollar has been weakening](https://www.reuters.com/markets/currencies/safe-haven-yen-swiss-franc-soar-us-slowdown-fears-flare-2024-08-02/) due to underwhelming economic data from the US and expectations of interest rate cuts by the Federal Reserve. As of now, the Dollar Index has declined by 2.01%, largely due to the anticipation of the Fed’s rate cuts in September. Lower interest rates reduce the returns on bonds and fixed deposits, making them less attractive to investors. This decreased demand for the Dollar indirectly supports the appreciation of the Ringgit. ### 6\. Economic Growth and Infrastructure Development [Malaysia’s economy is expected to grow by 5.8% in the second quarter of 2024](https://www.reuters.com/markets/asia/malaysias-economy-grows-42-yy-q1-beats-forecast-2024-05-17/), with low inflation at 2%. This growth is driven by private-sector investment, infrastructure projects, and increased economic activity. This positive economic outlook has supported the Ringgit’s recovery and growth. Additionally, stronger exports, particularly in the electrical and electronics sectors, have increased foreign receipts, further supporting the Ringgit. ## Conclusion The Ringgit’s recent rise definitely shows that there just might be some hope for Malaysia’s economy. While there are certainly some challenges that remain, the current momentum offers a hopeful glimpse into a future where Malaysia’s currency continues to strengthen.  *Subscribe to our* [*financial newsletter*](https://www.mrmoneytv.com/) *for the latest news, insights, and advice on personal finance, investing, and more. With every email, you’ll gather the confidence and knowledge to make informed decisions to achieve your financial goals.* ## Frequently asked questions ### Why is the Malaysian Ringgit rising in 2024? Several things lined up at once. Bank Negara Malaysia pushed exporters and companies to convert foreign exchange income into Ringgit, which lifted demand. It also held the Overnight Policy Rate at 3%, keeping Malaysian assets attractive. A weakening US Dollar, narrowing yield gaps that drew foreign money into equities, and projected 5.8% economic growth in the second quarter all added support. ### How much has the Ringgit strengthened in 2024? By mid-2024, the Ringgit had appreciated 2.8% month-on-month, which made it one of the best-performing currencies in the region. That was a real turnaround: earlier in 2024, headlines were about the Ringgit hitting record lows against the US Dollar and the Singapore Dollar. The rebound came from stronger local demand for the currency and a weakening US Dollar, not a single cause. ### Will the Malaysian Ringgit keep going up? The article does not promise that. It frames the recent rise as a hopeful sign for Malaysia's economy while noting that challenges remain. The gains rested on specific mid-2024 conditions: BNM's forex conversion measures, a steady 3% policy rate, expected US rate cuts, and projected 5.8% growth in the second quarter. If those conditions shift, the momentum could too, so the piece stops short of a firm forecast.