BANK Negara Malaysia (BNM) has held the Overnight Policy Rate (OPR) at 3.0% as policymakers reaffirmed the strength of domestic financial markets amid global turbulence triggered by sweeping US tariffs earlier this month.
Following its latest meeting on 28 April, the Financial Markets Committee (FMC) said Malaysia had weathered global shocks well, despite increased volatility stemming from US trade actions announced on 2 April.
The news had sent global equity markets tumbling—pushing the Cboe Volatility Index (VIX) to 52.3—and sparked declines of 12.1% and 11.3% in the S\&P 500 and MSCI World Index, respectively.
“The Malaysian financial markets have remained orderly despite the volatile external environment,” said FMC Chairman and BNM Deputy Governor Adnan Zaylani. “This allows us to focus our efforts on market development initiatives that will further enhance investors’ experience in our markets. Nonetheless, we remain vigilant amid the rapidly evolving global situation.”
Despite the global sell-off, the ringgit appreciated 2.3% year-to-date against the US dollar, reflecting regional trends as the US Dollar Index dropped 8.3%.
The FBM KLCI initially fell by 8.2% but recovered most losses after a temporary 90-day suspension of tariffs above 10%, closing just 1.1% down by 25 April.
Foreign exchange liquidity remains healthy, with an average daily turnover of USD18.8 billion, up 6.8% year-on-year.
Corporates continue to meet their foreign exchange needs efficiently, and interest in settling cross-border trade in local currencies is growing.
The domestic bond market has seen strong investor demand, with an average government bond auction bid-to-cover ratio of 3.01 year-to-date, up from 2.56 in 2024.
Trading volume in the secondary market has risen to RM7.3 billion a day, compared to RM4.6 billion in the previous year.
Corporate bond yields have narrowed amid strong demand, providing cheaper financing for businesses.
The FMC also highlighted the growth of Malaysia’s Islamic capital market, particularly in sukuk.
The Malaysian Government Investment Issue (MGII) now accounts for 48% of total government bonds outstanding and 47% of trading activity. Its inclusion in major international indices, such as the Bloomberg Global Aggregate Index and the J.P. Morgan Government Bond Index – Emerging Markets, has enhanced its global standing.
The FMC welcomed BNM’s initiatives to further improve the MGII market, including measures to increase visibility, liquidity, and accessibility. These include a review of dynamic hedging rules to support index trackers and efforts to strengthen repo facilities for domestic market makers.
Established in 2016, the FMC includes representatives from BNM, financial institutions, corporations, and other key stakeholders involved in Malaysia’s financial markets. - May 8, 2025
