Strengthened ringgit and economic optimism boost demand for Malaysia’s sovereign bonds.

Malaysia’s ringgit has emerged as one of the strongest performers among emerging Asian currencies in March, fueling investor confidence in the nation’s bonds. The currency has appreciated by nearly 0.8% this month, following the central bank’s call for state-linked companies to repatriate and convert their overseas earnings into ringgit. This policy, along with improving export figures and stable inflation, has supported the positive outlook for Malaysia’s fixed-income assets.

Investors are now taking note of Malaysia’s bonds, with local-currency sovereign bonds returning 1.1% to US dollar-based investors in March. In comparison, emerging Asian debt overall has gained just 0.2%, according to Bloomberg indexes. Malaysia’s relatively strong economic performance, coupled with its stable inflation profile, is driving demand for the country’s debt instruments.

Peerampa Janjumratsang, a fund manager at M&G Investments in Singapore, expressed a moderately optimistic view of Malaysia’s bonds, noting that they are a key element of the firm’s investment strategy. Janjumratsang highlighted the potential for the ringgit to continue its outperformance, supported by strong domestic consumption and the government’s efforts to stabilize the currency.

The ringgit’s recovery follows a steep drop to a 26-year low last month, prompting the Malaysian government and central bank to ramp up efforts to support the currency. Central bank governor Abdul Rasheed Ghaffour suggested in late February that the ringgit remains undervalued and should strengthen in line with Malaysia’s positive economic outlook.

The currency’s recent gains have encouraged both exporters and local investors to shift toward ringgit deposits and investments, alleviating concerns about further depreciation. As a result, Malaysia’s bond market has become increasingly attractive to investors looking for stable returns in a recovering currency environment.