The ringgit remained relatively stable in March, supported by expectations of narrowing interest rate differentials between Malaysia and the US. Notably, the Federal Reserve (Fed) announced a slowdown in the pace of its balance sheet reduction. Consequently, the ringgit has traded within a stable range, bolstered by Malaysia’s resilient economic fundamentals and steady investor confidence. This currency stability reflects optimism around the country’s macroeconomic outlook and policy direction, amid signs that the Fed is turning more dovish.

Malaysia’s exports surged by 6.2% in February, rebounding strongly from 0.3% in January. The increase was driven by an 8.8% rise in manufacturing output and an impressive 18.1% growth in the electrical and electronics sector. This recovery aligns with an improved Purchasing Managers’ Index, which climbed to 49.7 in February from 48.7 in January, indicating a rebound in demand. Regional trade shifts linked to US tariff policies also contributed to the export momentum.

Headline inflation eased to 1.5%, while core inflation inched up slightly to 1.9% in February. Despite persistent global headwinds, Bank Negara Malaysia held the Overnight Policy Rate steady at 3%. The central bank projected gross domestic product growth of between 4.5% and 5.5% for 2025, underpinned by strong domestic demand, stable employment conditions, and ongoing wage growth.

Recent historical data on capital outflows persisted due to global uncertainties. In February, net foreign outflows totalled RM1.7 billion in bonds and RM2.2 billion in equities, as investors became more risk-averse amid escalating geopolitical tensions and trade-related uncertainties. The negative spread between Malaysian Government Securities and US Treasuries continues to favour US assets, although this trend may reverse as US growth expectations moderate. Meanwhile, secondary market activity remained solid but eased slightly from previous highs.