Malaysia’s Financial Market Outlook Remains Positive On Strong Fundamentals, Supportive Monetary Policy
By Karina Imran and Fatin Umairah Abdul Hamid
KUALA LUMPUR, Oct 10 (Bernama) -- Malaysia’s financial market outlook remains positive, buoyed by strong macroeconomic fundamentals, supportive monetary policy and ongoing structural reforms aimed at driving sustainable economic growth.
The Ministry of Finance (MoF) in its Economic Outlook 2026 report released today, said steady participation in the domestic capital market, alongside the strengthening of the ringgit, signals heightened investor confidence.
“Moreover, the growing sophistication of Islamic banking and the capital market further reaffirms Malaysia’s commitment to ethical and value-based finance,” the ministry said.
In July 2025, Bank Negara Malaysia lowered the overnight policy rate (OPR) by 25 basis points (bps) from three per cent to 2.75 per cent, for the first time since May 2023. This led to a moderation in fixed deposit rates for one- to 12-month maturities, to between 1.95 per cent and 2.22 per cent.
The MoF noted that from the beginning of the year until the end of August 2025, the ringgit strengthened to RM4.2253, gaining 5.8 per cent against the US dollar.
It also appreciated against several Asian currencies, including the Indonesian rupiah (8.2 per cent), Philippine peso (4.3 per cent) and Chinese renminbi (3.4 per cent), maintaining its position as one of the region’s best-performing currencies.
"Additionally, the recent 25 bps rate cut by the US Federal Reserve in September 2025 to a range of four per cent to 4.25 per cent, coupled with expectations of two more rate cuts towards the end of 2025, may further boost the ringgit," the ministry said.
On another note, the MoF said the banking sector has maintained prudent liquidity management in balancing credit growth with deposits, as reflected in the loan-to-deposit ratio (LDR), which held steady at 87.2 per cent.
Additionally, the report stated that Malaysia's bond market is expected to remain resilient throughout the remainder of 2025, driven by sustained foreign demand and a supportive monetary policy environment.
"With global interest rates likely to trend lower and the US dollar expected to remain weak, demand for Malaysian sovereign and corporate bonds is anticipated to stay robust.
"Meanwhile, Malaysia's sound macroeconomic fundamentals, ample market liquidity and currency stability continue to strengthen its position as a preferred investment destination," it said.
The ministry said Malaysia's equity market is well-positioned to benefit from ongoing structural reforms, robust consumer spending, a stable political landscape and the continued strengthening of the ringgit, all of which are expected to sustain investor sentiment next year.
On Malaysia's Islamic capital market, the MoF said the segment is poised to expand further with a strong global leadership role, supported by continuous regulatory enhancements and a clear focus on sustainable finance.
Guided by the Maqasid al-Shariah aspirations, Malaysia aims to further strengthen governance and promote the development of socially-responsible financial products, reinforcing the country’s standing as a leading global hub for Islamic finance while reaffirming its commitment to sustainable, ethical and inclusive investment.
-- BERNAMA