Ringgit extends gains at close after Bank Negara decision to hold OPR at 2.75pc

KUALA LUMPUR, Nov 5 — The Malaysian ringgit extended its gains against major currencies on Thursday, closing higher after Bank Negara Malaysia (BNM) decided to keep the Overnight Policy Rate (OPR) at 2.75 per cent during its final Monetary Policy Committee meeting of the year. At 6pm, the local currency rose to 4.0445/0490 against the US dollar, up from Wednesday’s close of 4.0610/0660.

Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, stated that the decision to maintain the OPR was in line with expectations. BNM appears positive about the current state of the economy, with 2026 gross domestic product (GDP) growth anticipated to exceed 5.0 per cent. However, the central bank remains cautious about the potential for higher inflation in the future, which may warrant a 25-basis point increase in the OPR by 2027, possibly occurring in the first quarter.

US midterm elections, which could lead to increased scrutiny on the policies of the Trump administration, played a role in market sentiment today. Brent crude oil prices fell below US$100 per barrel, while the US Dollar Index (DXY) declined by 0.14 per cent to 101.423 points. SPI Asset Management's Stephen Innes noted that market sentiment was further bolstered by a drop in US Treasury yields following the sharp overnight fall in oil prices, as geopolitical risk premium was removed from the oil market.

Traders increasingly believe a conflict with Iran is unlikely, easing inflationary concerns in the US bond market. Asian currencies, including the ringgit, are primarily influenced by external developments, such as the direction of crude oil prices and the Federal Reserve's reaction, rather than domestic monetary policy.