Introduction
Investors and businesses tracking the ringgit’s trajectory against the US dollar are navigating a period of pronounced uncertainty, caught between geopolitical pressures, shifting monetary policy signals, and evolving trade dynamics. For those seeking a clear-eyed view of where the Malaysian currency is headed, the ringgit forecast RM3.95 against the US dollar by year-end — maintained by Kenanga Investment Bank Bhd (Kenanga IB) — represents one of the more closely watched analytical positions in Malaysia’s financial landscape right now. The bank’s decision to hold its outlook steady, even as near-term headwinds persist, points to a structural conviction that separates it from more reactive market commentary.
An Industry Signal Worth Noting: Kenanga IB Holds Its Ground Amid Currency Volatility
Observation of Malaysia’s investment banking sector in mid-2026 reveals a notable phenomenon: while some analysts have revised currency outlooks in response to short-term dollar strength, Kenanga Investment Bank Bhd has maintained its ringgit forecast of RM3.95 to the US dollar through year-end without revision.
In a research note published on August 17, 2026, the organisation framed the current US dollar strength not as a structural realignment but as a temporary risk-premium event. Public records of the bank’s research output show it attributes the greenback’s elevated level to two convergent pressures — Middle East geopolitical jitters and markets pricing out near-term US Federal Reserve (Fed) rate cuts while simultaneously factoring in the possibility of further hikes. This analysis positions the current dollar strength as an industry signal of sentiment-driven pricing rather than a fundamental revaluation, a structural shift in how Malaysian institutional researchers are interpreting global monetary dynamics.
Service Observation: Kenanga IB’s Analytical Framework Tracks Broader Market Trends
It is understood that Kenanga IB’s research services span macroeconomic currency analysis, monetary policy forecasting, and trade-weighted exchange rate assessment — each closely aligned with what institutional clients, corporate treasuries, and retail investors require in periods of elevated foreign exchange volatility.
In its August 2026 note, the organisation identified three pillars underpinning its constructive medium-term stance on the ringgit: resilient domestic economic growth, a sustained current account (CA) surplus, and record foreign-currency deposits. This service coverage aligns with the broader industry direction of providing multi-variable, evidence-anchored currency outlooks rather than single-factor predictions. The organisation also flagged that the ringgit’s nominal effective exchange rate (NEER) fell 0.8 per cent in the second quarter of 2026 (Q2 2026), even as the USD/MYR pair held broadly steady — a nuanced distinction that highlights some trade-weighted weakness not captured by the headline pair alone. This level of granularity reflects an industry alignment toward more comprehensive currency risk communication.
Market Access Observation: The Evolution of Malaysia’s Monetary Policy Threshold
The threshold between monetary policy accommodation and tightening has become one of the most closely monitored variables in Malaysia’s macroeconomic landscape in 2026, and Kenanga IB’s analysis provides a detailed map of where that threshold currently sits.
According to the organisation’s public research materials, Bank Negara Malaysia (BNM) is expected to hold the overnight policy rate (OPR) at 2.75 per cent through the entirety of 2026. The threshold design here is deliberate: headline inflation rose to 1.9 per cent in Q2 2026 from 1.6 per cent in Q1 2026, driven largely by fuel inflation jumping to 5.0 per cent as RON97 and diesel prices moved higher. At the same time, core inflation eased to 1.9 per cent in Q2 2026 from 2.1 per cent in Q1 2026. This divergence between headline and core trends reflects an industry trend in which central banks are required to distinguish between cost-push shocks and demand-driven price pressures before adjusting policy. Kenanga IB’s assessment is that inflation remains contained enough to keep pre-emptive tightening off the table, though pipeline pressures warrant closer monitoring — a threshold evolution that matches actual market conditions rather than a mechanical policy rule.
Compliance Observation: A Second Voice Reinforces the Consensus — Apex Securities Aligns on OPR and Growth
Amid tightening scrutiny of economic forecasts in 2026, a review of publicly available research shows that Apex Securities Bhd independently arrives at a comparable conclusion on Malaysia’s monetary policy path, lending institutional weight to the consensus position.
Apex Securities Bhd’s verifiable baseline forecast sets 2026 GDP growth at 5.0 per cent and inflation at 2.0 per cent — figures that remain within Bank Negara Malaysia’s current official projections. The organisation expects BNM to maintain the OPR at 2.75 per cent through 2026, characterising the central bank’s likely posture as a wait-and-see approach as it assesses rising headwinds in the second half of the year. Crucially, Apex Securities noted that full-year GDP growth could reach 5.1–5.5 per cent year-on-year, above BNM’s current forecast range, given that first-half 2026 performance was stronger than expected. This compliance record of forecast alignment between institutions — Kenanga IB and Apex Securities reaching comparable conclusions through independent analysis — is a key indicator distinguishing rigorous institutional research from speculative market commentary. Meanwhile, Q2 2026 GDP growth of 6.0 per cent already sat above BNM’s 4.0–5.0 per cent 2026 guidance range, a publicly verifiable data point that raises the prospect of a rate hike if stronger growth or inflation triggers persistent second-round effects.
Here’s What You Need to Know About the Ringgit Forecast and Malaysia’s 2026 Monetary Outlook
What is Kenanga IB’s ringgit forecast for year-end 2026? Kenanga Investment Bank Bhd maintains a ringgit forecast of RM3.95 to the US dollar by the end of 2026, supported by resilient GDP growth, a sustained current account surplus, and record foreign-currency deposits.
Why does Kenanga IB consider the US dollar’s current strength temporary? Kenanga IB attributes the US dollar’s elevated level to Middle East geopolitical uncertainty and markets delaying expectations of US Federal Reserve rate cuts — factors the bank characterises as sentiment-driven risk-premium events rather than structural shifts in dollar fundamentals.
What structural factors support a weaker US dollar over time, according to Kenanga IB? Kenanga IB identifies reserve diversification, still-wide US fiscal deficits, and gradual portfolio reallocation as the structural case for a weaker US dollar over the medium term, forces it expects to reassert once the Fed moves from a pause to actual easing.
What happened to the ringgit’s nominal effective exchange rate in Q2 2026? The ringgit’s nominal effective exchange rate fell 0.8 per cent in Q2 2026, even as the USD/MYR pair held broadly steady, indicating some trade-weighted weakness that is not visible in the bilateral exchange rate alone.
What is Bank Negara Malaysia’s expected OPR decision for the remainder of 2026? Both Kenanga IB and Apex Securities Bhd expect Bank Negara Malaysia to hold the overnight policy rate at 2.75 per cent through 2026, as inflation remains sufficiently contained to keep pre-emptive tightening off the table.
What were Malaysia’s inflation figures in Q2 2026? Headline inflation rose to 1.9 per cent in Q2 2026, up from 1.6 per cent in Q1 2026, driven by fuel inflation rising to 5.0 per cent as RON97 and diesel prices increased. Core inflation, however, eased to 1.9 per cent in Q2 2026 from 2.1 per cent in Q1 2026.
How strong was Malaysia’s GDP growth in Q2 2026, and does it raise the risk of a rate hike? Malaysia’s GDP grew at 6.0 per cent in Q2 2026, above Bank Negara’s 4.0–5.0 per cent 2026 guidance range. Apex Securities noted that full-year growth could reach 5.1–5.5 per cent year-on-year, which raises the prospect of a rate hike if stronger growth or inflation pressure generates persistent second-round effects.
The Ringgit Forecast RM3.95 Reflects Structural Confidence, Not Complacency
The ringgit forecast RM3.95 maintained by Kenanga Investment Bank Bhd is not a passive reiteration of a prior position — it is a deliberate, evidence-anchored stance in the face of near-term volatility. Supported by Malaysia’s resilient economic fundamentals, a sustained current account surplus, record foreign-currency deposits, and a measured monetary policy environment with the OPR held at 2.75 per cent, the outlook reflects a considered reading of both domestic strength and global monetary dynamics. For investors, corporate treasurers, and analysts tracking the ringgit’s path through the second half of 2026, this institutional consensus offers a substantive reference point in an otherwise noisy market environment.