Malaysian Ringgit: Range consolidation view against US Dollar – Commerzbank

Commerzbank's Charlie Lay and Dr. Henry Hao note that Bank Negara Malaysia (BNM) held rates at 2.75% while maintaining a cautious stance. They expect a 25 bp hike in Q1 2027 and see USD/MYR consolidating within the 4.00–4.10 range.

BNM cautious, Ringgit rangebound

"Bank Negara Malaysia (BNM) maintained its Overnight Policy Rate (OPR) at 2.75% at its final policy meeting of 2026. This was in line with around 70% of analysts in a Bloomberg survey. The OPR has remained unchanged since the 25bp insurance cut in July 2025. The policy statement retained a mildly hawkish tone, although it stopped short of signalling an imminent rate hike."

"BNM upgraded its 2026 growth assessment to above 5%, from around 5% in September, supported by robust exports, sustained domestic demand and investment. Growth is expected to remain resilient in 2027, underpinned by the global technology upcycle, tourism and measures under Budget 2027. BNM maintained that the current policy stance remains consistent with price stability and sustainable growth, suggesting it sees no immediate need to hike."

"BNM's inflation assessment was somewhat more hawkish. Although headline and core inflation averaged just 1.8% and 1.9%, respectively, in the first nine months of 2026, BNM expects both to edge higher in 2027 amid elevated global commodity prices, geopolitical tensions and adverse weather conditions. Nevertheless, inflation is expected to remain contained, supported by domestic policy measures."

"The combination of above-trend growth and rising inflation risks strengthens the case for a gradual return to a more neutral policy stance, rather than an aggressive tightening cycle. We continue to expect a 25bp hike to 3.00% in Q1 2027, potentially at the March meeting, effectively reversing the July 2025 insurance cut. However, BNM's emphasis on vigilance rather than pre-emptive action suggests the timing will depend on whether higher input costs translate into sustained underlying inflation pressures."

"The near-term direction will be dictated by the broader global risk sentiment, the USD, Fed expectations, and oil prices. We look for consolidation in the near term between 4.00-4.10."