The Malaysian ringgit is Asia’s best-performing currency this year, up 4.0% against the US dollar. Support factors include strong growth, foreign direct investment into data centres and technology supply chains, and steady exports.
Malaysia’s Q4 GDP was revised up to 6.3% year on year, implying 5.2% growth in 2025, the fastest pace in three years. Exports are expected to stay firm, led by electronics, oil and gas, and crude palm oil.
Inflation remains contained, and Bank Negara Malaysia is expected to keep the Overnight Policy Rate unchanged at 2.75% for the foreseeable future. USD/MYR is expected to trade around 3.85–3.90 in the near term.
From our perspective in late 2025, the Malaysian Ringgit was positioned for significant gains, backed by strong growth forecasts and a stable central bank policy. The expectation was for the USD/MYR to trade in a tight 3.85-3.90 range, reflecting the nation’s robust economic health. However, as we stand today, the currency has not followed this path and is currently trading near 4.78 against the US dollar.
The economic data has since presented a more mixed picture than the optimism seen last year. The final figures for Q4 2025 GDP came in at 3.0% year-on-year, a significant moderation from the earlier revised estimate of 6.3%. On a more positive note, export growth has remained a key support, with January’s data showing an 8.7% increase driven by strong demand for electronics and petroleum products.
Bank Negara Malaysia has indeed maintained the Overnight Policy Rate as expected, holding it steady to support the economy while inflation remains contained. January’s inflation print of 1.5% confirms that price pressures are not an immediate concern, giving the central bank continued flexibility. This policy stability contrasts with the currency’s actual performance.
Given this divergence, derivative traders should consider strategies that benefit from range-bound price action or a slow grind weaker for the MYR, rather than the outright strength previously anticipated. Selling out-of-the-money USD call options with strike prices above 4.85 could be a viable strategy to collect premium, capitalizing on the view that a sharp appreciation of the Ringgit is unlikely. This approach acknowledges the supportive export data which may prevent a more significant currency collapse.
