Ringgit opens higher on expectations of OPR normalisation

KUALA LUMPUR: The Malaysian ringgit began the trading day on a bullish note on Monday, buoyed by anticipations of an overnight policy rate (OPR) normalization prior to the Bank Negara Malaysia's Monetary Policy Committee (MPC) meeting scheduled for Thursday. At 8am, the domestic currency was marginally higher at 4.0550/0635 against the US dollar, up from last Friday's closing rate of 4.0555/0600.

Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, speculated that MPC members would opt to hike the OPR by 25 basis points (bps). He reasoned that the preemptive rate cut announced in July 2025, which reduced the OPR from three percent to 2.75 percent, had fulfilled its intended purpose, as concerns over a slowdown in economic growth post the tariff shock had not materialized.

In 2025, the country's GDP expanded by 5.2 percent and in the first nine months of 2026, growth surged to 5.5 percent. Consequently, the argument for OPR normalization becomes apparent, as the apprehensions of slower growth following the tariff shock have not come to fruition. Hence, this could bolster the ringgit's value today, Dr Afzanizam informed Bernama.

Nonetheless, he added that market expectations remain unchanged, with the benchmark interest rate expected to stay at 2.75 percent. Regarding external factors, currency markets are anticipated to exercise caution ahead of the United States midterm elections on Tuesday, given the uncertainties surrounding the conflict in West Asia.

With respect to major currencies, the ringgit experienced an uptick against the British pound, reaching 5.4276/4390 from 5.4461/4522 last Friday, strengthened vis-a-vis the euro to 4.5238/5332 from 4.5413/5464, and appreciated versus the Japanese yen to 2.5715/5771 from 2.5782/5812. However, the ringgit traded sideways against its Asean peers, maintaining a steady value against the Singapore dollar at 3.1724/1793, advancing against the Thai baht to 12.0024/0400, and remaining flat against the Indonesian rupiah at 223.4/224.0 and the Philippine peso at 6.36/6.38 compared to last Friday's closing rates.