Malaysia’s industrial production rose 4.8% year on year in December, above the 4.5% Bloomberg consensus and up from 4.3% in November. Growth was linked to electronics and export-focused manufacturing.
Mining output fell 5.2% year on year, compared with a 2.3% rise in November, and this was the first contraction since May 2025. The decline was tied to lower natural gas production, with a recovery expected in 2026 as additional facilities come on line after maintenance ends.
Ringgit Strength And Trading Range
USD/MYR fell 0.3% to about 3.92 and stayed near its lowest level since July 2018. The move was linked to foreign inflows and strong semiconductor exports.
In the near term, USD/MYR is expected to trade within a 3.90 to 4.00 range. The article was produced with an AI tool and checked by an editor.
The data from back in December 2025 showed strong industrial production, and this trend appears to be holding. We see the Malaysian ringgit strengthening against the dollar, pushing USD/MYR down to levels we haven’t seen since mid-2018. The market expects the pair to remain in a tight 3.90 to 4.00 range for the near future.
This stability is supported by fresh statistics confirming the underlying strength. January’s trade data, released last week, showed semiconductor exports grew by a solid 9.5% year-on-year, continuing the robust performance seen late last year. We also tracked a net $1.5 billion of foreign inflows into the local bond market in January, showing continued investor confidence.
Volatility Strategies And Key Risks
Given this low volatility forecast, selling options looks like a compelling strategy for the coming weeks. We believe short-dated strangles or iron condors with strike prices outside the 3.90-4.00 range, such as selling a 3.88 put and a 4.02 call, could yield consistent returns from time decay. This approach capitalizes on the expectation that the exchange rate will not experience any major breakouts.
Looking at historical charts from 2018, the last time the pair traded this low, it found significant support around the 3.85-3.90 level for several months. A key risk to watch is the mining sector, which is expected to rebound and could add further strength to the ringgit, potentially testing the lower end of our range. Any unexpected global risk aversion could also quickly push the dollar higher, breaking the 4.00 ceiling.
For those looking for yield, structuring range accrual notes could be another effective approach. These instruments would pay an enhanced coupon for each day the USD/MYR spot rate closes within the specified 3.90-4.00 band. This directly plays into the view that the currency will remain stable in the weeks ahead.
