$100 Oil Meets the AI Computing Hardware Export Boom! Malaysian Ringgit Poised to Reverse Its Fortunes in the FX Market on "Dual Catalysts"

Some senior FX market strategists say rising oil prices and the AI boom are providing positive tailwinds for the Malaysian ringgit, and the sovereign currency could be poised for gains. Although the ringgit has fallen 1.2% since September, underperforming all other Asian currencies, the latest forecast from MUFG Bank shows that the ringgit will appreciate to 4.03 per dollar by year-end. Sumitomo Mitsui Banking Corporation expects it to reach 4.0 per dollar by then. The ringgit rose 0.3% as of last Friday's FX market close, quoted at 4.0738 per dollar. Elevated international oil prices and expanding AI hardware demand are providing the Malaysian ringgit with two mutually reinforcing support channelsenergy export revenue buffers external shocks, while electronics exports, which are highly linked to the AI infrastructure buildout, enhance foreign exchange earning capacity. The core view of financial institutions that are bullish on the Malaysian ringgit focuses on strong electronics exports, capital inflows, and policy stability jointly supporting exchange rate recovery. The key variable in the energy market remains whether the restoration of shipping through the Strait of Hormuz and U.S.-Iran negotiations can truly reduce supply risks. Iranian President Pezeshkian's tough remarks during the United Nations General Assembly last week, as well as Houthi attacks on Saudi Arabia, successively strengthened market concerns about Middle East supply disruptions. On September 25, as news heated up that the U.S. and Iran were exploring a phased end to the conflict, Brent crude oil futures fell 2.1%, but still closed at $104.32 per barrel; then on September 27, Trump said he had rejected Iran's proposal, while expecting negotiations to resume this week; Iranian Foreign Minister Araghchi stressed that conditions would not be softened. Negotiation channels between the U.S. and Iran remain, but differences over strait passage, port blockades, and the nuclear issue make it difficult for the geopolitical risk premium in energy prices to fade quickly. The export support brought by the AI infrastructure frenzy is already reflected in Malaysia's trade data. Official data show that goods exports in August rose 45.5% year-on-year to about 191.05 billion ringgit; among them, exports of electrical and electronic products rose 66.5% year-on-year to about 92.48 billion ringgit, accounting for 48.4% of total exports. The International Monetary Fund also lists Malaysia, together with China, South Korea, and Thailand, as the world's four largest net exporters of AI-related hardware. All of this means that Malaysia can capture part of the incremental demand from global computing power investment through electronics manufacturing and the critically important packaging and testing chain in the semiconductor industry. Oil prices and AI computing power demand jointly support the ringgit exchange rate trend Another rise in oil prices could increase the income of this energy-exporting country, while Malaysia's increasingly important position in the AI supply chain also allows it to benefit from growing semiconductor demand. As the political risk premium surrounding some state elections also gradually fades, strategists expect the ringgit to resume its upward trend. Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking Corporation in Singapore, said: "As concerns about the macro environment ease, we may see the ringgit stage a rebound after a period of pent-up pressure before year-end." He said that considering Malaysia's energy and electronics exports, as well as the linkage between the ringgit and a strengthening renminbi, "Malaysia's overall fundamentals remain positive." Driven by growth in shipments of electronics including semiconductors, the country's exports rose by more than 35% year-on-year for five consecutive months through August. The average export growth rate in 2025 is about 6.7%. According to the International Monetary Fund, Malaysia is currently, along with South Korea, China, and Thailand, among the world's top four net exporters of AI infrastructure-related hardware. As shown in the chart above, benefiting from liquefied natural gas exports and AI infrastructure hardware exports, Malaysian bond assets attracted foreign inflows for the second consecutive month. Lloyd Chan, an FX strategist at MUFG Bank in Singapore, said: "Malaysia's electronics trade surplus has already been able to help offset higher oil import bills." He added that, supported by attractive sovereign bonds and ringgit valuation, "we believe there is room for the Malaysian ringgit to strengthen." According to Bank for International Settlements data, the ringgit's real effective exchange rate is about 2% below its 20-year average. Continued inflows into the bond market may help support the ringgit. Investors will closely watch S&P Global's Malaysia September manufacturing purchasing managers' index to be released local time on Thursday for further signs of economic expansion, while the region is still dealing with the shock from the Middle East situation. However, as one of the world's major liquefied natural gas exporters, Malaysia may be better able than some other economies to cope with rising energy costs. Goldman Sachs strategists including Danny Suwanapruti wrote in a September 18 report: "So far this year, Malaysia has been on the relatively favorable side of changes in international trade conditions," and is best positioned to benefit from AI investment and rising energy prices. They said that as global central banks shift slightly more hawkish, "the conditions are in place for the ringgit to outperform other currencies," and recommended going long the ringgit and short the Thai baht. Both Thailand and Malaysia can participate in the technology export cycle, but differences in energy balance structures, policy expectations, and capital flows may give the ringgit a relative advantage. The ringgit's "dual positive catalysts": energy shock resilience, AI technology boosts foreign exchange earnings The market's understanding of the ringgit's investment logic is closely tied to the dual positive catalysts of "energy buffer + strong AI technology hardware exports." Malaysia has an important liquefied natural gas export business, and higher energy prices can improve related export revenue, but the country also needs to import crude oil, and high oil prices will also raise import expenditure and fuel subsidy pressure. Therefore, what determines exchange rate fundamentals is the net result of oil and gas export revenue, energy import costs, and the trade surplus in semiconductor packaging and testing and AI infrastructure-related electronics. MUFG Bank explicitly pointed out that the electronics trade surplus helps offset higher oil resource import bills. This also explains why "energy exporter" and "bearing rising oil import costs" can both be true at the same time. From the perspective of AI system architecture, agents expand a single user request into a continuous workflow of model inference, retrieval, tool invocation, code execution, and result verification, and infrastructure demand accordingly covers GPU computing, CPU execution, memory capacity and bandwidth, as well as storage and high-performance network infrastructure and optical interconnect systems. When demand is transmitted to the hardware supply chain, Malaysia's main beneficiary segments include existing electronics manufacturing, semiconductor assembly and advanced packaging, testing foundations, as well as ongoing upgrades in design and 2.5D/3D advanced packaging. The Malaysian Investment Development Authority has clearly listed these directions as priorities for industrial upgrading. For the ringgit, the truly important transmission chain is that global AI investment translates into local orders, production, and export revenue, and further forms foreign exchange settlement demand; growth in overseas computing power spending itself will not automatically ringgit buying on a one-for-one basis. Capital flows are providing another layer of support. RAM Ratings data show that Malaysia's bond market recorded 15.9 billion ringgit of net foreign inflows in August, and continued net inflows of 3.5 billion ringgit in the first 17 days of September, indicating that bond assets are continuing to attract overseas funds. On policy, Malaysia's central bank kept the overnight policy rate at 2.75% on September 3, while emphasizing vigilance toward cost pressures and changes in domestic demand. Bond valuations, policy credibility, and foreign allocation demand are expected to strengthen support for the ringgit, but the actual exchange rate impact still depends on whether funds conduct FX hedging and other cross-border receipts and payments.