After a year of turmoil in the foreign exchange market, the Japanese yen and South Korean won, which have shown a rollercoaster performance in 2025, are expected to lead the gains in the new year, with their appreciation against the US dollar likely outpacing other Asian currencies and also rebounding against the Singapore dollar.
Against the backdrop of a weakening US dollar, the exchange rate of the dollar against the Malaysian ringgit is expected to decline by more than 8% in 2025, reflecting the ringgit's leading performance among Asian currencies. Meanwhile, the Thai baht and Singapore dollar are also expected to show solid gains, but the Indian rupee, Indonesian rupiah, and Vietnamese dong may lag behind.
DBS Bank currency strategist Huang Jiangcheng predicted in an interview with Lianhe Zaobao that the US dollar will continue to weaken in the first half of 2026, after which the Trump administration will focus on the US midterm elections in November 2026.
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<h3>Analysis: Mixed Performance of Asian Currencies, Weak Dollar Benefits Them</h3>
Saktiandi Supaat, head of foreign exchange research at Malayan Banking, also expects the US dollar to decline slightly in the first half of the year, but Asian currencies will perform unevenly. &#34;A weaker dollar benefits most Asian currencies, but the domestic political situation and fiscal credibility of each country will determine which currencies become winners and which become losers.&#34;
According to DBS's forecast, the exchange rate of the dollar against the ringgit may fall to 1 USD to 4.00 MYR by the end of September 2026, before recovering slightly. Supaat expects this exchange rate to drop to 4 by the end of next year. However, this is not the most eye-catching prediction, as some have already anticipated that this exchange rate will fall below the 4.00 level in the coming year, making the ringgit one of the stronger-performing Asian currencies again.
OCBC Bank currency strategist Huang Jinglong pointed out that the fundamentals of the ringgit remain strong, mainly benefiting from high-quality foreign direct investment inflows, better-than-expected economic growth, an expanding trade surplus, and the government's clear commitment to fiscal consolidation. At the same time, constructive messages from policymakers, including the expectation that the dollar to ringgit exchange rate may be &#34;slightly below 4&#34; by mid-2026, further boost market confidence.
In addition, the Federal Reserve's easing policy and the stability of the renminbi are favorable for the ringgit. The renminbi exchange rate is shifting from defensive stability to guided appreciation, and it is expected to rise steadily and orderly in the coming year.
According to DBS's forecast, the dollar to renminbi exchange rate will reach 7.00 by the end of September next year, before recovering slightly. Other analysts predict that this exchange rate will fall below 7.
<h4>Further Reading</h4>
The ringgit exchange rate is expected to remain strong in 2026, with the Singapore dollar to ringgit reaching 3.1776

 DBS: The Singapore dollar to US dollar exchange rate is expected to reach 1 by 2040, with the sea index approaching 10,000 points


As for the Asian currencies that may lead next year, such as the Japanese yen and the South Korean won, although both currencies saw their exchange rates against the US dollar rise by more than 10% at one point in 2025, they gave back all gains and turned to decline in the second half of the year, ultimately becoming underperforming Asian currencies.
DBS predicts that the USD/JPY exchange rate will fall to 141 by the end of September next year, followed by a slight recovery; the USD/KRW exchange rate will dip to 1370 before recovering. Huang Zhangcheng pointed out that Japan and South Korea's tolerance for their currencies weakening is decreasing, and both countries increasingly view this as a unilateral speculative action, which exacerbates excessive fluctuations in currency exchange rates.
Mitsubishi UFJ Financial Group (MUFG Bank) senior currency analyst Wen Zhenquan noted that as the Bank of Japan resumes interest rate hikes and the US is expected to cut rates in 2026, the weak yen situation should reverse, but currently, the yen is weighed down by concerns over domestic fiscal policy and the new government's policy focus.
He also believes that the Chinese yuan, Malaysian ringgit, and South Korean won should perform well in 2026, partly due to the expected acceleration of structural reforms in these countries. In contrast, the Indonesian rupiah, Indian rupee, and Vietnamese dong are expected to perform poorly next year, as their macro stability indicators have deteriorated to some extent, including current account conditions, fiscal conditions, and credit growth dynamics.
<h3>Analyst: By the end of 2026, the SGD will fall to 3.1560 against the MYR</h3>
As for the Singapore dollar, Huang Zhangcheng expects the Monetary Authority of Singapore to maintain the nominal effective exchange rate policy for the SGD unchanged throughout 2026, based on official forecasts of lower economic growth and slightly higher inflation levels. DBS predicts that the USD/SGD exchange rate will dip to 1.24 by the end of September next year, followed by a recovery.
In 2026, the performance of the SGD against other Asian currencies will vary. Huang Jinglong expects the ringgit, yuan, and Australian dollar to outperform the SGD. By the end of 2026, the SGD/MYR exchange rate will fall to 3.1560, the SGD/CNY exchange rate will drop to 5.43, and the AUD/SGD exchange rate will rise to 0.88.
Additionally, he predicts that the SGD/JPY exchange rate will ultimately decline and fall to around 114 by the end of 2026, provided that policymakers can demonstrate fiscal discipline and the Bank of Japan resumes monetary policy normalization. The SGD/KRW exchange rate is expected to fall to 1055 by the end of 2026, as some negative sentiment is dissipating, and South Korea and the US have reached an agreement on trade issues

After experiencing turmoil, the foreign exchange market is expected to see the Japanese yen and South Korean won lead the gains in 2025, with the US dollar expected to decline over 8% against the Malaysian ringgit. The Thai baht and Singapore dollar are also expected to show solid gains, while the Indian rupee, Indonesian rupiah, and Vietnamese dong may perform poorly. DBS expects the US dollar to remain weak in the first half of 2026, with the Trump administration focusing on the midterm elections in 2026. Malayan Banking Berhad believes that a weaker US dollar is beneficial for Asian currencies, but the political and fiscal conditions of each country will determine currency performance. OCBC Bank points out that the Malaysian ringgit has strong fundamentals and may become one of the stronger-performing Asian currencies

Zaobao

OCBC Bank

Analyst: The Malaysian Ringgit and Renminbi strengthen, while the Japanese Yen and Korean Won fluctuate this year; the outlook for next year is optimistic | Lianhe Zaobao