BNM Holds OPR at 2.75% as USD/MYR Breaks 4.00: Key Economic Data to Watch
Monetary Policy: Stable OPR, Strong Ringgit Performance
On January 22nd, Bank Negara Malaysia (BNM) announced that it would keep the Overnight Policy Rate (OPR) unchanged at 2.75%. In July last year, the central bank cut interest rates for the first time in five years, lowering the OPR by 25 basis points from 3% to 2.75%. Since then, it has maintained the OPR at 2.75% for three consecutive meetings (September, November 2025, and January 2026), stating that this level strikes a balance between price stability and economic growth, aligning with economic fundamentals. Investor sentiment remained buoyant alongside the policy stability; the local equity market performed strongly this week, with the $FTSE Bursa Malaysia KLCI Index (.KLSE.MY)$ hovering around the 1,715 level—its highest point since 2019.
In terms of exchange rates, the Ringgit was one of Asia’s best-performing currencies. Currently, the exchange rate breaks at RM4.00 per US dollar, with strong economic fundamentals and stable investor confidence providing solid support to resist the impact of global exchange rate volatility.
GDP Growth: Higher-Than-Expected Expansion
Malaysia's GDP grew by 4.9% year-on-year (YoY) in 2025. While slightly moderating from the 5.1% growth in 2024, it exceeded the central bank's forecast range, demonstrating economic resilience. Growth in the fourth quarter was particularly outstanding, surging by 5.7% YoY— the second-highest since Q1 2022—accelerating from 5.2% in Q3 and continuing the quarterly upward trend.
Economic growth was driven by coordinated expansion across multiple sectors, with steady growth in services, manufacturing, agriculture, and construction. As the backbone of the economy, the services sector showed robust vitality in areas such as wholesale and retail trade, and information and communications. The manufacturing sector benefited from a recovery in global demand and industrial upgrading, with significant output growth in electrical and electronic products. The recovery in domestic consumption, investment, and construction further consolidated the foundation for growth.
Foreign Trade: Record Total Volume, Stable Surplus
Malaysia's economy concluded 2025 with strong trade data. December's trade figures significantly outperformed expectations: export growth accelerated to 10.4% YoY, up from 7% in November and far exceeding the market consensus forecast of 2.5%. Import growth slowed slightly from 15.8% in November to 12.0% but remained robust.
In 2025, Malaysia's total trade volume surpassed 3 trillion MYR for the first time, rising by 6.3% YoY. Both export and import volumes hit historical highs, marking the 28th consecutive year of trade surplus. Specifically, exports increased by 6.5% to 1.607 trillion MYR, while imports grew by 6.2% to 1.455 trillion MYR, maintaining a stable surplus scale.
Manufactured goods were the core driver of exports, with electrical and electronic products, machinery and equipment setting new export records—highlighting Malaysia's position in the global electronic industrial chain. Agricultural products such as palm oil, supported by stable demand, served as a supplementary driver for exports.
Inflation & Finance: Moderate Inflation, Improving Fiscal Position
Malaysia's annual inflation rate stood at 1.6% in December 2025, higher than November's figure and the market forecast of 1.4%. Overall, inflation remained moderate and manageable.
Fiscal consolidation continued to advance. The 2025 fiscal deficit target was set at 3.8% of GDP, narrowing from 4.1% in 2024 and extending the downward trend since 2022. By shifting from universal subsidies to targeted subsidies, the government optimized revenue and expenditure structures, directing more funds to social security, science and education, infrastructure, and other key areas.
Labor Market: 11-Year Low Unemployment, Improved Job Quality
Malaysia's labor market maintained an upward trajectory in 2025, with expanded employment scale and unemployment rate falling to a historic low. In November, the unemployment rate dropped further to 2.9%—the lowest since November 2014—with the number of unemployed people slightly decreasing to 518,400. As early as May, the unemployment rate had reached 3.0%, down 0.3 percentage points from the same period in 2024; the number of unemployed declined by 5.7% YoY, remaining at a low level for multiple consecutive months.
In November, the total labor force reached 17.61 million, growing by 0.2% YoY, with the labor force participation rate stable at 70.9%. The employment structure continued to improve: the proportion of salaried employees reached 74.8%, with the number increasing to 12.78 million, while self-employed individuals totaled 3.26 million, reflecting a more diversified employment pattern. All key sectors—services, agriculture, manufacturing, and construction—recorded employment growth, except for a slight decline in mining and quarrying, indicating strong employment absorption capacity of core industries.
Economic Outlook: Sustained Momentum, Coexisting Risks and Opportunities
Looking ahead to 2026, Malaysia's economic growth momentum is expected to continue. The Ministry of Finance projects a 3.3% increase in trade volume and GDP growth to remain within the 4.0%-4.5% range. Key drivers include the recovery in domestic demand, industrial structure optimization, and diversified foreign trade markets, while emerging areas such as digital transformation and green economy will inject new impetus. However, external uncertainties—including global trade tensions and geopolitical conflicts—and internal challenges such as rising debt service costs persist
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Kelisa93 : our RM getting stronger
103157939 : i think big boys dumping usd la
103157939 : go read Asian Guy..on rdcent dump of 879 bil of bonds..
Andy77 Kelisa93 : it's the opposite.. weakening of USD
Slay2dudes : ok
Andy77 : not every sector in Malaysia is booming.. it's the Japanese and European countries are selling off US Treasury bonds. Japan raising rates.. carry trade.. etc
Annnnnthebadest : Honestly, this Ringgit pump is just noise. It doesn’t change the thesis. Zoom out 20 years on the MYR against the USD or SGDit’s a brutal, structural bleed. And let’s be real, that’s a feature, not a bug, for export-heavy economies.
Parking cash in EPF or FDs? You’re basically getting yield on a melting ice cube. Compare that to the S&P 500, you’re not just missing the growth, you’re losing on the FX spread too. That’s why I’m treating this rally as a discount window to stack more hard assets equities, gold, crypto—while they’re on sale. Better to play in the dollar ecosystem than fight macro gravity.