Malaysia is fast becoming a haven in Southeast Asia and foreign investors are returning to a long-overlooked market as a confluence of improving growth, stable government and rising currency sets it apart among peers grappling with political flux.

Foreigners have steadily poured more money into Malaysian debt and stocks this year. In July, as political troubles brewed in Thailand and Indonesia, they pumped in $1.75 billion into Malaysian debt markets—the highest in a year.

Kuala Lumpur’s stock market is gunning for its strongest yearly performance in well over a decade.

Analysts say the ringgit has been the fulcrum of this outperformance, and Asia’s best-performing currency thus far in 2024 should do even better as the Federal Reserve starts cutting rates, increasing the appeal of Malaysian bonds.

“It’s been a fairly startling outperformance for the currency,” said Leonard Kwan, portfolio manager of T. Rowe Price’s dynamic emerging markets bond strategy. “I think most of the returns of the performance have come from the currency, rather than on the bond side.”

The comeback story for Malaysia is underpinned by an economy that expanded at its fastest rate in 18 months in the second quarter and a stable political environment since Anwar Ibrahim became prime minister in 2022 after years of turbulence.

Foreigners now own 20% of outstanding Malaysian bonds, according to central bank data. The ringgit touched an 18-month high against the dollar on Thursday.