Malaysia's financial markets remain resilient amid global volatility: FMC
KUALA LUMPUR: Malaysia's financial markets have remained stable and orderly despite persistent global volatility, the Financial Markets Committee (FMC) said in its latest assessment.
This assurance comes as global investors react to the United States' sweeping tariff announcement on April 2, 2025, which has shaken market sentiment and renewed fears over the direction of global trade policy.
FMC chairman and Bank Negara Malaysia deputy governor Adnan Zaylani said the strength of Malaysia's markets has allowed regulators to maintain their focus on long-term development.
"The Malaysian financial markets have remained orderly despite the volatile external environment. This allows us to focus our efforts on market development initiatives that will further enhance investors' experience in our markets.
"Nonetheless, we remain vigilant amid the rapidly evolving global situation," said FMC chairman and Bank Negara Malaysia deputy governor Adnan Zaylani.
The US tariff move has triggered jitters among global investors, leading to cautious investment sentiments and renewed concerns over global trade policy directions.
Despite initial shocks, Malaysia's financial indicators have shown encouraging signs.
"The ringgit has appreciated by 2.3 per cent year-to-date against the US dollar, largely driven by broad-based dollar weakness across global markets," FMC said in a statement.
Meanwhile, the domestic equity market, represented by the FBM KLCI, initially saw a sharp 8.2 per cent drop in reaction to the tariff news but recovered significantly following a temporary pause in its implementation. As of April 25, the index stood just 1.1 per cent below its level at the start of April.
The foreign exchange market remains robust, with average daily turnover at US$18.8 billion so far this year—marking a 6.8 per cent year-on-year increase, according to the committee. This sustained activity continues to support corporate forex needs.
In terms of fixed-income performance, the domestic bond market has shown strong investor demand. The average bid-to-cover ratio for government bond auctions has improved to 3.01 in 2025, up from 2.56 in 2024. Secondary market liquidity has also surged, with average daily trading volume rising to RM7.3 billion this year compared to RM4.6 billion in 2024, reaching a peak of RM15.5 billion.
The FMC also noted increasing interest in the use of local currencies for cross-border trade and investment settlements, reflecting growing regionalisation of financial activities.
Looking ahead, the FMC expressed support for Bank Negara's ongoing efforts to strengthen the Malaysian Government Investment Issue (MGII) market.
It said these will include a review of the dynamic hedging framework to facilitate hedging by index trackers as well as supporting market-making by domestic financial institutions through improved repo availability.
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