Ringgit likely to strengthen ahead of Budget 2026

The Malaysia ringgit could gain ground before Budget 2026, supported by Bank Negara Malaysia’s steady monetary policy stance and expected fiscal reforms.

As Malaysia prepares for Budget 2026 coming up on Friday (10 October 2025), market watchers quoted in recent reports say the ringgit is expected to firm up in the coming days. Investors are taking comfort from Bank Negara Malaysia’s (BNM) monetary policy and the government’s plans for fiscal consolidation.

Stephen Innes, Managing Partner, SPI Asset Management, told Bernama that BNM, having cut rates once earlier this year, is now likely to keep the Overnight Policy Rate (OPR) at 2.75%. This removes the risk of further rate cuts that could unsettle the market.

“The Budget is also expected to stick to a consolidation path that trims the deficit incrementally,” he was quoted as saying.

Innes added that a softer US dollar could also support the ringgit, which may strengthen to around 4.20 against the US dollar if pre-Budget announcements reinforce fiscal credibility.

Gradual fiscal reforms expected

The government expects incremental measures rather than major changes in Budget 2026. Speaking to Bernama, Innes highlighted subsidy rationalisation, including diesel and RON95 under the Budi MADANI RON95 (BUDI95) initiative, along with a slow reduction of deficit and debt levels.

He emphasised that maintaining spending discipline in Budget 2026, without introducing taxes that could hinder growth, would help support medium-term investor confidence.

As also quoted in the Bernama report, Dr Ahmed Razman Abdul Latiff, Professor, Putra Business School, agreed that fiscal reforms are expected to continue in Budget 2026, with further deficit reduction and cost savings through subsidy rationalisation. He added that these measures could help support investor confidence and the ringgit, citing the positive market response to the RON95 subsidy rationalisation.

Dr Ahmed also noted that measures under the 13th Malaysia Plan (13MP) are expected to be rolled out carefully, with continuous monitoring to prevent wastage and leaks.

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