The Malaysian ringgit is Asia’s best-performing currency this year. It is up 4.0% against the US dollar. Key supports are 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. That suggested 5.2% growth in 2025, the fastest pace in three years. Exports were expected to stay firm, led by electronics, oil and gas, and crude palm oil.
Inflation remains contained. 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 ringgit looked set for solid gains. The case was based on strong growth forecasts and a steady central bank. We expected USD/MYR to stay in a tight 3.85–3.90 range, reflecting Malaysia’s healthy economy. But that did not happen. Today, the currency is trading near 4.78 per US dollar.
Since then, the data has been more mixed than last year’s optimism. The final Q4 2025 GDP figure was 3.0% year on year, well below the earlier revised estimate of 6.3%. One bright spot is exports. January export growth rose 8.7%, helped by strong demand for electronics and petroleum products.
Bank Negara Malaysia has kept the Overnight Policy Rate steady, as expected. It is holding policy to support the economy while inflation stays low. January inflation was 1.5%, showing limited price pressure and giving the central bank room to stay flexible. Even so, this policy stability has not translated into ringgit strength.
Because of this gap between expectations and outcomes, derivative traders may want to focus on strategies that work in a range, or that allow for a slow MYR weakening, instead of betting on outright strength. One approach is to sell out-of-the-money USD call options with strikes above 4.85 to collect premium. This fits the view that a sharp ringgit rebound is unlikely. At the same time, strong exports could help limit the risk of an even larger currency slide.
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