EMERGING MARKETS-Ringgit strengthens past key 4 per dollar barrier; Asian stocks hit record highs

By Nichiket Sunil

Jan 23 (Reuters) - The Malaysian ringgit crossed the psychologically crucial 4 per dollar level on Friday as strong economic fundamentals and attractive growth prospects buoyed optimism towards one of Asia's strongest performing currencies.

Stocks in the region climbed to record high levels after U.S. President Donald Trump pulled back earlier tariff threats on European imports, while ruling out acquiring Greenland by force.

The ringgit MYR= surged 1% to its highest level since January 2021, extending gains after Bank Negara Malaysia held rates as expected on Thursday and signaled that 2025 growth would meet the upper end of forecasts.

"Ringgit's outperformance seen in 2025 is likely to spill over to 2026," said Christopher Wong, a currency strategist at OCBC.

"Domestically, Malaysia's fundamentals remain encouraging, supported by quality FDI inflows, upbeat growth, a wider trade surplus and clear commitment to fiscal consolidation."

The Indonesian rupiah IDR= extended its recovery into a third consecutive session, gaining 0.3% to 16,825 against the dollar. Earlier in the week, the currency slumped to an all-time low of 16,985 on concerns of wider fiscal deficit and the central bank's independence.

Singapore stocks .STI meanwhile climbed as much as 1.4% to a record high, supported by gains in major banks, which make up nearly half of the benchmark index.United Overseas BankUOBH.SI, one of the city-state's largest lenders, soared 4.8% to a record.

"We think the risk-on sentiment is one of the factors contributing to outperformance of the Singapore markets," DBS Group Research analysts told Reuters.

"Investors may also be positioning in banks with potential scope for dividend upside in upcoming results, alongside the quality they offer."

In East Asia, South Korea .KS11 and Taiwan .TWII stocks ended the session at record closing highs as easing trade and geopolitical tensions put the spotlight back on artificial intelligence trades, helping the chip-heavy benchmarks.

Bank of Japan kept interest rates steady and raised its economic and inflation forecasts, although its hawkish signals did little to curb the pressure on the yen JPY=, which declined for a fifth-straight session.

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