The first day of trade for 2021 saw the ringgit in its strongest performance since June 2018.
As at 10.30am, the currency was trading at RM3.95 against the US dollar.
Analysts had predicted that the ringgit would strengthen to between RM3.80 and RM3.90 against the dollar this year, amid expectations of the economy recovering and news of the Covid-19 vaccine.
The ringgit started its downward spiral in late 2014, causing a hike in the prices of food and services.
The ringgit and the Indonesian rupiah were the worst performing currencies in the Asean region.