By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, July 17 – The ringgit, rupiah, dong, baht and peso are unlikely to move in lockstep during the second half of 2026. Juwai IQI Global Chief Economist Shan Saeed explains why fading US dollar strength is likely to favour the ringgit and rupiah more than the dong, baht or peso.
The US dollar’s dominance is not ending, but the era of an ever-widening American yield advantage is losing momentum. The Federal Reserve maintained the federal funds target range at 3.50%–3.75% in June, leaving the next phase of the dollar cycle increasingly dependent on inflation, labour-market conditions, fiscal risk and geopolitics rather than monetary tightening alone.
For Southeast Asia, this creates a more constructive, though highly selective, currency environment. According to Shan Saeed, Global Chief Economist at Juwai IQI, the central question is no longer whether every regional currency will appreciate, but which economies possess the external buffers, monetary credibility and capital-flow architecture needed to convert dollar fatigue into durable exchange-rate stability.
Shan tracks five major ASEAN currencies—the Malaysian ringgit, Indonesian rupiah, Vietnamese dong, Thai baht and Philippine peso—which he collectively refers to as the “Fabulous Five.”
“Across ASEAN’s Fabulous Five, the direction of travel may gradually converge, but the magnitude of performance will remain decisively country-specific,” Shan said.
RINGGIT: RM3.90–RM4.20
The Kuala Lumpur USD/MYR reference rate stood at 4.0651 on July 10, while daily foreign-exchange turnover reached approximately US$18.93 billion, reflecting the depth and liquidity of Malaysia’s domestic currency market. Bank Negara Malaysia has maintained the Overnight Policy Rate at 2.75%.
“The Malaysian ringgit enters H2 2026 with the strongest risk-adjusted appreciation profile within the group,” Shan said.
“The ringgit’s support structure extends well beyond interest-rate differentials. Malaysia continues to benefit from electrical and electronics exports, commodity receipts, tourism inflows and investment commitments across semiconductors, data centres and advanced manufacturing.
“The principal risks are largely external: renewed dollar strength, prolonged geopolitical disruption, weaker Chinese demand or a material deterioration in global trade.
“The ringgit offers the most balanced combination of valuation support, external resilience and institutional credibility. A move below 4.00 is achievable under a softer-dollar scenario, although sustained appreciation will require continued export momentum, disciplined fiscal execution and durable investment inflows.”
RUPIAH: Rp17,500–Rp18,500
Bank Indonesia’s JISDOR reference rate stood near Rp18,069 per US dollar on July 10, keeping exchange-rate stability at the centre of the monetary-policy debate.
“The Indonesian rupiah remains the highest-beta currency among the five ASEAN currencies,” Shan said.
“Bank Indonesia’s tighter policy stance strengthens the rupiah’s carry proposition and signals a willingness to defend monetary credibility against imported inflation, capital outflows and global market volatility.
“Indonesia’s large domestic economy, commodity-export base and long-term investment narrative remain fundamentally supportive. Nevertheless, the rupiah will continue to trade with heightened sensitivity to US Treasury yields, offshore participation in the domestic bond market and changes in global risk appetite.
“The rupiah offers meaningful recovery potential, but not a linear appreciation story. A move toward 17,500 would require a weaker dollar, renewed foreign portfolio inflows and sustained monetary discipline. The upside is material, but so is the volatility.”
DONG: ₫25,700–₫26,800
“Vietnam’s dong remains structurally different from its regional peers because its trajectory is more tightly managed,” Shan said.
“Export manufacturing, electronics production and sustained foreign direct investment generate recurring foreign-currency inflows. However, strong import demand, corporate dollar requirements and the authorities’ preference for preserving export competitiveness maintain a gradual depreciation bias.
“The State Bank of Vietnam is therefore likely to prioritise orderly adjustment over headline appreciation, using the exchange rate as part of a broader framework balancing inflation, export competitiveness, foreign-exchange liquidity and domestic growth.
“The dong is unlikely to lead an ASEAN currency rally. Its strategic value lies in managed volatility, policy predictability and alignment with Vietnam’s export-led economic model, not aggressive capital appreciation.”
BAHT: ฿32.75–฿34.75
The Thai baht traded around 33.3 per US dollar on July 10, while the Bank of Thailand maintained its policy rate at 1.00% on June 24.
“Tourism receipts, seasonal current-account improvement and firmer merchandise exports should provide a degree of support,” Shan said.
“However, Thailand’s low interest-rate structure, elevated household leverage and uneven domestic growth limit the baht’s capacity to outperform consistently.
“The currency also remains sensitive to gold-related flows and shifts in regional investor positioning, occasionally producing sharp movements that are not fully explained by domestic economic fundamentals.
“The baht has room to appreciate during periods of broad dollar weakness, but its upside conviction remains lower than that of the ringgit. Tourism provides an important external buffer, but it is not a substitute for stronger productivity, investment and domestic-demand momentum.”
PESO: ₱59.50–₱62.50
The Philippine peso stood near ₱61.50 per US dollar on July 10, making the earlier 56–60 range too optimistic as a central H2 scenario.
“Remittances, business-process outsourcing receipts and service exports provide durable sources of foreign exchange,” Shan said.
“Nevertheless, the Philippines remains exposed to elevated energy-import costs, infrastructure-related capital-goods demand and periodic concerns over fiscal execution.
“The peso’s trajectory will therefore depend on whether strong domestic growth can attract sufficient long-duration capital to offset the economy’s structural demand for imported energy, machinery and intermediate goods.
“The peso should stabilise as the dollar loses momentum, but a sustained move below 60 would require a more favourable combination of lower oil prices, softer US yields, improved external balances and stronger portfolio inflows.
THE INVESTMENT SIGNAL
Rather than a broad-based ASEAN currency rally, H2 2026 is more likely to deliver selective mean reversion following an extended period of US dollar strength.
“The ringgit offers the strongest balance of valuation, external support and policy credibility,” Shan said. “The rupiah provides higher carry and greater recovery potential, but with materially higher volatility. The dong remains a managed-stability instrument. The baht is leveraged to tourism, exports and gold flows, while the peso remains the most exposed to energy prices and structural import demand.
“Dollar fatigue may open the door, but domestic credibility will determine which currencies walk through it. The decisive variables will be central-bank execution, reserve adequacy, inflation discipline, current-account resilience and the capacity to attract long-duration productive capital rather than short-term speculative flows.
“The principal downside risks remain a renewed US inflation shock, persistently elevated oil prices, weaker Chinese demand, geopolitical escalation and an abrupt deterioration in global risk sentiment. The dollar cycle will shape the regional tide, but it will not determine every outcome. In currency markets, direction is cyclical, but credibility is structural.”
- TNS NEWS