KUALA LUMPUR, Dec. 15 (Xinhua) -- Economists have foreseen the Malaysian ringgit (MYR) to appreciate further against the U.S. dollar (USD) in 2026 amid a softer USD and resilient economic fundamentals.

In a recent report, research house MBSB highlighted that the ringgit's positive outlook is underpinned by the expectations that the interest rate differential between Malaysia's overnight policy rate (OPR) and the U.S. Federal Reserve (Fed)'s federal funds rate will continue to narrow throughout 2026.

"As the Fed executes further rate cuts, coupled with a renewed rise in global risk appetite, investors' capital would flow back into emerging markets, including Malaysia," said the report.

It added that the ringgit's overall performance will remain predominantly dictated by shifts in the global financial market dynamics and cross-border capital movements.

The MBSB also highlighted that the positive economic fundamentals, including a continued current account surplus, will also support the appreciation of the ringgit.

OCBC Bank said in a recent note that the ringgit is likely to remain firm, supported by improving domestic fundamentals, ongoing fiscal consolidation, and other factors.

According to the bank, among ASEAN currencies, the ringgit was an outperformer on domestic resilience in the second half of this year.

"We still see room for ringgit gains to extend into 2026," said OCBC, noting that domestically, Malaysia's fundamentals remain encouraging, supported by quality foreign direct investment inflows, upside growth surprises, a wider trade surplus and a clear commitment to fiscal consolidation. ■