Ringgit opens higher on expectations of OPR normalisation

The Malaysian ringgit began the trading day higher on Monday, buoyed by speculation that the overnight policy rate (OPR) might be normalized prior to Bank Negara Malaysia's Monetary Policy Committee (MPC) meeting on Thursday. At 8 a.m., the local note was trading at 4.0550/4.0635 against the US dollar, an improvement from last Friday's close of 4.0555/4.0600.

Afzanizam Rashid, the chief economist at Bank Muamalat Malaysia Bhd, speculated that the MPC might increase the OPR by 25 basis points (bps). He reasoned that the pre-emptive rate cut in July 2025, which reduced the OPR from 3% to 2.75%, had achieved its objective, as concerns over slower economic growth due to the tariff shock had not materialized.

In 2025, the GDP grew by 5.2%, while in the first nine months of 2026, GDP growth accelerated to 5.5%. Given this, the rationale for OPR normalization becomes apparent, as the apprehensions of slower growth post-tariff shock have not come to fruition. Consequently, this could lend support to the ringgit today, Rashid added. However, he noted that the market consensus suggested the benchmark interest rate would remain unchanged at 2.75%.

On foreign exchange markets, the ringgit gained against the British pound, euro, and Japanese yen, while trading mixed against its Asean peers.