The Malaysian ringgit hit a 26-year low against the USD in February 2024. The government blamed speculators. Economists blamed the Fed. The data points to a third explanation that nobody in Putrajaya wants to say out loud.

Currency weakness in an emerging market is never a simple story. It is a Rorschach test for how you think about capital flows, trade policy, and the relationship between monetary sovereignty and global financial integration. Malaysia’s 2024 ringgit crisis — which saw MYR/USD trade at levels not seen since the 1998 Asian Financial Crisis — was described publicly as an external shock, a Fed-driven phenomenon beyond Kuala Lumpur’s control. The data tells a more uncomfortable story.

This matters beyond Malaysia’s borders. The ringgit is one of the bellwether currencies for ASEAN’s mid-income emerging markets. When it weakens, it affects the purchasing power of Malaysia’s 33 million people, its import costs, its debt service on foreign-currency obligations, and its competitiveness relative to Thailand, Indonesia, and Vietnam for export market share and FDI. What happens to the ringgit is a read on the structural health of a middle-income ASEAN economy navigating between China exposure and US dollar dominance. Other ASEAN finance ministries watch it closely.

The ringgit’s 2024 decline did not begin in 2024. It began in 2021, when the post-pandemic USD strengthening cycle started. Between January 2021 and February 2024, the ringgit depreciated from approximately MYR 4.05 per USD to MYR 4.79 — a cumulative decline of roughly 18 percent. The February 2024 trough of approximately MYR 4.79 to 4.80 represented the ringgit’s weakest point since January 1998, during the Asian Financial Crisis, when Bank Negara Malaysia imposed capital controls and pegged the ringgit at MYR 3.80.

The narrative in early 2024 focused on the Fed’s “higher for longer” interest rate posture, which sustained dollar strength globally. That explanation is partially correct. But it does not explain why the ringgit underperformed regional peers — the Thai baht, Indonesian rupiah, and Philippine peso all depreciated against the dollar over the same period, but none reached multi-decade lows relative to 1998 benchmarks with the same resonance.

The third explanation — the one that avoids official acknowledgement — involves a structural current account problem that Malaysia’s political economy has not adequately addressed.

Malaysia’s current account surplus, which provided a crucial buffer during the 1997–98 crisis, has been structurally declining for two decades. From 15.9 percent of GDP in 1999, it had narrowed to 1.2 percent of GDP by 2023. The mechanism: Malaysia’s export structure has become concentrated in commodities (palm oil, LNG, rubber) and mid-tech manufacturing (semiconductors, electronics), both of which face price cyclicality. When global commodity prices and tech demand weaken simultaneously — as they did in 2023 — export earnings compress. A narrowing current account surplus removes the natural floor under the ringgit.

Simultaneously, Malaysia’s ringgit-denominated assets have not offered sufficient yield premium over USD assets during the Fed tightening cycle to attract or retain portfolio inflows. Bank Negara Malaysia (BNM) held its policy rate at 3 percent through 2023 and 2024, declining to follow the Fed’s tightening precisely because the Malaysian economy could not absorb higher rates without damaging domestic consumption and the housing market. The result was a widening interest rate differential that made MYR-denominated assets structurally less attractive to foreign portfolio investors.

The ringgit’s trajectory: MYR 4.05 to USD in January 2021 → MYR 4.79 in February 2024 → recovery to approximately MYR 4.47 by mid-2024 → MYR 4.44 to 4.50 range through H2 2024 → projected MYR 4.05 average and MYR 4.00 year-end target for 2026, per HLIB Research.

The February 2024 low represented a 15.2 percent depreciation from the January 2021 level — consistent with the article’s headline characterization of a “15 percent fall.” From the pre-2021 equilibrium around MYR 4.10, the cumulative depreciation to the 2024 trough exceeded 16 percent.

Who won? Malaysian exporters with USD-denominated revenue and MYR-denominated cost bases: palm oil producers (FGV Holdings, Sime Darby Plantation), electronics manufacturers (Inari Amertron, Globetronics), and upstream oil and gas companies with international contracts. A palm oil producer generating US$100 million in annual USD revenue saw its MYR earnings increase from approximately MYR 405 million to MYR 479 million simply through exchange rate movement — a 18 percent earnings increase with no change in operational performance. The ringgit crisis was an exporter windfall dressed up as a national emergency.

Bank Negara Malaysia’s position — that the ringgit’s weakness was externally driven and would self-correct as the Fed moved toward easing — was not wrong. It was incomplete. BNM’s pledge in April 2024 to ensure “orderly functioning of the foreign exchange market,” supported by government-linked companies and state-controlled corporations repatriating USD earnings, was a real intervention that contributed to the subsequent recovery. By mid-2024, the ringgit was outperforming all of its Asian peers over the prior three months, recovering to MYR 4.47. The critics who called for emergency structural reforms in February 2024 were partially overtaken by the event: the market stabilized before structural reforms were necessary. BNM’s calm, targeted intervention worked — in the short term.

The 2026 outlook from HLIB Research and MUFG projects a stronger ringgit at MYR 4.00 to 4.05 by year-end 2026. The drivers: Fed rate cuts creating USD softness, Malaysia’s improving FDI inflows under Anwar’s administration’s investment push (data centres, semiconductor corridors in Penang and Johor), and repatriation of USD earnings by Khazanah and Petronas on government request.

Prime Minister Anwar Ibrahim’s response to the ringgit crisis was instructive. He publicly called on state-owned corporations and large multinationals with Malaysian operations to convert their foreign currency revenues into ringgit — moral suasion rather than regulatory mandate. Several government-linked companies complied. The intervention was heterodox but effective: it created demand for MYR without requiring interest rate increases that would have hurt domestic borrowers.

The deeper structural issue remains. Malaysia’s current account surplus needs to widen, which requires either stronger export competitiveness or lower import demand. The former requires industrial policy; the latter would suppress growth. The ringgit’s 2024 crisis was a symptom of a structural rebalancing that Malaysia’s political economy has repeatedly deferred. In 2026, with the ringgit recovering and the political pressure off, the probability of deferral is, as usual, high. The next time the Fed tightens, this conversation will happen again.

Sources: Bloomberg (MYR 26-year low February 2024, April 2024 BNM pledge), East Asia Forum (structural reform analysis), AMRO Annual Consultation Report Malaysia 2024, AMRO (Ringgit comeback analysis), Business Today Malaysia (current account and ringgit), The Edge Malaysia (exporter sector impacts), MUFG Research (MYR outlook November 2025), HLIB Research (2026 MYR projections)