How did better-than-expected 4Q 2025 GDP growth lift the ringgit?

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Better-Than-Expected 4Q 2025 GDP Growth Bolstered Ringgit Performance

The Malaysian ringgit experienced a strengthening against the US dollar at the opening of trading on Monday, directly correlating with the release of a better-than-expected 6.3 per cent gross domestic product (GDP) growth for the fourth quarter of 2025. This positive economic indicator provided upward momentum for the local currency, influencing its performance against a range of other currencies.
Ringgit Opens Stronger Against the US Dollar

At 8:00 AM on Monday, the ringgit began trading at a firmer rate of 3.8970/9190 against the US dollar. This represented an improvement from its closing position of 3.9060/9155 on the preceding Friday, indicating immediate market reaction to the strong GDP figures.
Resilient Economy and Potential GDP Forecast Revision

An analysis suggests that the country's resilient economic performance makes it likely that the current official GDP forecast for 2026, set between 4.0 per cent and 4.5 per cent, will be revised upwards. This optimism stems from the robust 6.3 per cent growth recorded in the fourth quarter of 2025.
Impact on Monetary Policy and Interest Rate Gap

The anticipation of an upward revision in GDP forecasts implies that the Overnight Policy Rate (OPR) would likely be maintained at its current level throughout 2026, as there would be no perceived urgency to further stimulate the economy. Furthermore, the interest rate differential between the US Federal Reserve's fund rate and Malaysia's OPR is expected to narrow, particularly as the Federal Reserve is anticipated to ease its monetary policy stance.
Ringgit Targets Key Psychological Level

Consequently, the prevailing economic conditions and monetary policy outlook led to expectations that the ringgit would attempt to break through the significant psychological level of RM3.9000 against the US dollar on that particular day of trading. The currency's performance against a basket of major currencies also reflected this positive trend, with notable appreciations against the euro and British pound, though it depreciated against the Japanese yen. Additionally, the ringgit traded higher against its ASEAN peers, including the Singapore dollar, Thai baht, Indonesian rupiah, and Philippine peso.

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How did better-than-expected 4Q 2025 GDP growth lift the ringgit?

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