KUALA LUMPUR, Feb 1 — The strengthening of the ringgit to its highest level in more than seven years against the United States (US) dollar has been welcomed as positive news for the public and is seen as reflecting the effectiveness of governance policies, political stability, and growing investor confidence in Malaysia’s economic prospects.
Earlier this week, the ringgit broke through the psychological level of 4.00 against the greenback and extended an upward trend that began the previous week, signalling improved sentiment towards the country’s economic fundamentals and political stability.
While the stronger local currency is expected to bring significant benefits to consumers and import-dependent businesses, experts caution that its impact will take time to be fully felt on the ground.
Noted professor Datuk Shamsul Amri Baharuddin said the delayed impact is largely due to existing inventories, namely goods purchased or imported, as many goods currently in the market were imported when the ringgit was weaker, preventing immediate price reductions.
In this regard, the public should not rush into spending or question the absence of immediate effects; instead, they should understand the time lag between currency strengthening and its actual impact on retail prices.
The director of the Universiti Kebangsaan Malaysia Institute of Ethnic Studies said that four main groups stand to benefit from a stronger ringgit: consumers, import-reliant businesses, the government, and Malaysians who travel or reside overseas.
“When the ringgit strengthens, imported goods such as smartphones, vehicles, medicines, wheat and milk become cheaper. However, consumers will only feel the impact after older stock is cleared.
“Price reductions generally take two to three months, and in some cases up to four months, especially for high-value items such as vehicles,” he told Bernama.
Shamsul stressed that the public should not misinterpret the delayed impact as a failure of government policy, as price transmission varies by product type, value, and supply chain dynamics.
For essential goods, items with faster turnover, such as fresh food and medicines, are likely to reflect price changes earlier than durable or infrequently purchased goods, such as canned food or vehicles.
“Goods bought daily or weekly tend to show price adjustments more quickly, while high-value items take longer and should not be used as immediate indicators of the ringgit’s impact,” he said.
From a business perspective, the stronger ringgit allows importers to gradually reduce operating costs, although the extent to which these savings are passed on to consumers depends on pricing structures, distribution chains and the role of middlemen.
Shamsul added that strict enforcement and price monitoring by authorities are crucial to ensure that lower import costs translate into fairer prices for consumers.
Meanwhile, economist Prof Ahmed Razman Abdul Latiff described the ringgit’s strengthening as a “positive signal” for the national economy, enhancing foreign investor confidence and bringing long-term benefits, including job creation.
The Putra Business School's director of its business administration's master's and doctoral programmes said the impact of a stronger ringgit is not limited to macroeconomic indicators but also affects daily life, with sectors such as livestock farming expected to benefit earlier.
“For example, Malaysia’s chicken farming industry depends almost entirely on imported animal feed. When the ringgit strengthens, the cost of importing chicken feed becomes cheaper and may contribute to lower chicken prices in the market,” he said.
The stronger ringgit also increases the purchasing power of local people who wish to travel overseas as exchange rates become more favourable than before.
When asked to comment on sceptical views that the current strengthening of the ringgit is driven mainly by US dollar weakness, Razman said the local currency's performance is driven by a combination of external and internal factors.
“It is true that the US dollar is weakening, but Malaysia’s domestic economic factors also play an important role. Compared with other Asian currencies, the ringgit recorded among the strongest performances, showing that the national economy has been in a positive and expanding state since last year,” he said.
Domestic economic stability, including accommodative monetary policy with the overnight policy rate (OPR) at 2.75 per cent throughout 2026, has also provided room for more robust near-term economic activity.
However, Razman noted that the government must pay attention to the impact of ringgit strengthening on the export sector and domestic tourism, as local export goods could become more expensive in overseas markets, which could weaken demand.
“It is important for Malaysia to continue maintaining competitiveness through the production of high-value-added products. The strengthening of the ringgit will not hurt Visit Malaysia Year 2026 even though the purchasing power of foreign tourists becomes smaller against the ringgit,” he said.
