Exporter conversions may support ringgit as foreign-currency deposits fall
BNP Paribas SA forecasts the ringgit at 3.90 per dollar by June 2027, supported by corporate conversions, investment inflows and economic fundamentals.
Malaysia’s foreign-currency deposits declined 8.6% in August to RM308 billion (US$75.5 billion), central bank figures showed. Analysts said the fall may signal that exporters are exchanging more overseas earnings for ringgit, potentially supporting the currency through the rest of the year.
The monthly contraction was the largest since 2010. Khoon Goh, head of Asian research at Australia and New Zealand Banking Group, said business foreign-currency deposits had been declining since July. He cautioned that official figures tracking exporters’ conversions were unavailable, making deposits held at commercial banks an indicator rather than a direct measure.
BNP Paribas SA expects corporate conversions, economic fundamentals and foreign direct investment inflows to help strengthen the ringgit from around 4.08 per dollar. Its emerging-market Asian foreign exchange and rates strategist, Parisha Saimbi, said exporters seeking to limit foreign-exchange exposure and investment for data centre construction could increase conversion flows.
Exports increased 45% year-on-year in August, equalling June’s growth rate. The ringgit gained 1.5% against the dollar in August before surrendering some ground in September as the dollar recovered more broadly.
Bank Negara Malaysia has reiterated its encouragement for state-linked businesses and private companies to bring foreign-currency income home and convert it. Goh said stronger conversions would support the ringgit, while portfolio flows remained another important influence.
