Summary

• Malaysia’s export performance strengthened in April, rising by 16.4% (Mar: 6.8%). This was supported by a 19.0% surge in manufacturing exports, led by strong gains in electrical and electronic (E&E) products, and machinery & equipment. The front-loading of exports after the 90-day tariff pause announcement boosted trade flows, with early gains helping to cushion potential slowdowns once the tariff reprieve ends.
• Domestic demand remains a key growth driver, with private consumption rising 5.0% in 1Q2025 and investment activity holding steady at 9.7%. Capital imports surged by 114.1% in April, reflecting ongoing capacity expansion and strong project realisation. This momentum is expected to be sustained in 2025, moderating external trade risks. Furthermore, Bank Negara Malaysia (BNM) reduced the Statutory Reserve Requirement (SRR) ratio to 1% in May from 2% previously, which would release approximately RM19 billion into the banking system to support liquidity.
• Bond inflows surged to RM10.2 billion in April (Mar: RM3.2 billion), the highest monthly inflow since the previous major peak of RM11.3 billion in July 2023. Furthermore, net equity outflows eased to RM1.9 billion (Mar: -RM4.7 billion). This brought the combined bond and equity net inflows to RM8.3 billion. Consequently, foreign holdings of Malaysian Government Securities (MGS) and Government Investment Issues (GII) edged higher to 21.5% (March: 20.9%). The USDMYR moved from 4.43 as at end-March towards 4.20 in May, in tandem with the improvement in foreign capital flows.
• The Dollar Index (DXY) weakened in May as US Treasury (UST) yields surged on fiscal concerns. The 10-year yield rose 31bps to 4.48%, a post-February high after the US credit downgrade by Moody’s, while the 30-year yield climbed above 5% amid weak 20-year auction demand and worries over the impact of Trump’s tax bill on debt sustainability.