KUALA LUMPUR: Malaysia’s domestic financial markets continued to adjust in an orderly manner, supported by balanced two-way flows that ensured effective price intermediation among market participants, according to Bank Negara Malaysia’s Financial Markets Committee (FMC).
The ‘Discussion Summary’ of the FMC Meeting 2/2026 revealed that market conditions remained conducive for corporates to raise funds to meet their financing requirements.
"Looking ahead, external factors such as geopolitical uncertainties, oil price volatility and an evolving global interest rate environment remain near-term headwinds for the domestic market. However, members noted that the recent increase in bond yields may present an attractive entry point for foreign investors, given that investor sentiment towards Malaysia continues to be favourable,” the FMC said.
It added that these factors, alongside ongoing measures such as the qualified resident investor programme and engagement with government-linked companies, government-linked investment companies and corporates to repatriate and convert their foreign currency income, are expected to provide continued support for the foreign exchange and bond markets.
The FMC also said recent movements in the domestic financial markets were driven primarily by global factors, particularly developments in the US policy rate.
"Growing prospects of higher US interest rates and the actual realisation of a rate hike by the US Federal Reserve led to a stronger US dollar and higher US Treasury yields. These, in turn, resulted in broad-based adjustments across global markets, including regional currencies and bonds,” it added.
On the currency, it noted that the ringgit moderated in September after remaining largely stable in July and August, while Malaysian Government Securities yields also increased following a prolonged period of relative stability. This came amid a broader repricing of global interest rate expectations and higher global bond yields.
Members of the committee also observed robust interest in corporate bond issuance and increased hedging activity. - Bernama
