Inflation And Policy Outlook
BNM projected average headline inflation of 1.5–2.5% in 2026. This compares with 1.3–2.0% in Budget 2026 and DBS’s 2.0% forecast, reflecting expectations of contained price pressures from external and domestic sources. Policy is expected to remain on hold in 2026, which may help keep bond yields anchored. The update noted Malaysia faces geopolitical uncertainty while maintaining a strong starting position. The resilient macroeconomic backdrop suggests the Malaysian Ringgit will remain stable against the US dollar in the coming weeks. With GDP growth forecast at 4.0-5.0% and inflation contained, we do not expect major currency shocks. This points towards a low-volatility environment for the USD/MYR pair. We have seen the USD/MYR pair trade within a narrow band of 4.68 to 4.72 over the past month, reinforcing this outlook. Given this stability, traders should consider strategies that profit from low volatility, such as selling out-of-the-money options on the currency pair to collect premium.Rates Bonds And Flow Support
Bank Negara Malaysia’s decision to keep the Overnight Policy Rate (OPR) at 3.00% last month, a level held since mid-2025, anchors this view. This policy stance suggests that Malaysian bond yields will also remain relatively stable. Consequently, we see limited price movement in Malaysian Government Securities (MGS) futures for the near term. The outlook is further supported by consistent capital inflows, with foreign investors adding a net RM 1.2 billion to Malaysian equities in March 2026. This positive sentiment underpins both the FBM KLCI and the Ringgit. This contrasts with the net outflows we experienced during the global risk-off period in late 2025. While the primary theme is stability, the underlying strength provides a slight appreciation bias for the Ringgit. For those wanting a directional view, using bull call spreads on MYR could be a prudent way to position for modest gains while defining risk. This allows us to participate in any upside without being overly exposed to a sudden shift in global sentiment. Create your live VT Markets account and start trading now.
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