“We do not see the depreciating ringgit as a risk to the sovereign rating,” said Yee Farn Phua, sovereign analyst at S&P in Singapore.

“Malaysia’s external position remains strong, augmented by adequate foreign reserves and consistent current-account surpluses.”

The ringgit slid to the lowest level in 26 years this week as China’s sluggish economy hurts Malaysian exports, and some analysts have said there is a risk the currency will reach a new record low.

The currency, which traded at 4.79 per dollar on Thursday, is expected to climb to 4.40 by the end of the year and 4.30 by end-2025, Phua said in an email on Thursday.

S&P joins Moody’s Investors Service in highlighting the safety of the nation’s credit rating despite the ringgit’s weakness, as almost all the nation’s debt is denominated in the local currency.

The government’s foreign debt was about RM30 billion (US$6.26 billion) at the end of 2023, just under 3% of the total, S&P estimated.

Malaysia has been rated A- at S&P since 2003, signifying its strong ability to pay debt. The credit score, the highest among peers in developing Southeast Asia, has withstood the fallout from the 2008 global financial crisis as well as the turmoil caused by the pandemic.