EUR/MYR Outlook:
The EUR/MYR exchange rate is likely to decrease, trading below its recent average and near recent lows, primarily influenced by weaker euro indicators.
Key drivers:
• Rate gap: The European Central Bank maintains a neutral stance on interest rates, while Bank Negara Malaysia keeps rates lower, narrowing the interest rate differential that traditionally supports the MYR.
• Risk/commodities: Oil prices have remained volatile and are currently above their recent average, but rising energy costs can pressure the euro, which is sensitive to energy disruptions.
• Macro factor: Malaysia’s strong economic growth continues to attract foreign investment, contributing positively to the MYR and indicating robust economic activity.
Range:
Expect EUR/MYR to move within its recent range, potentially testing lower extremes.
What could change it:
• Upside risk: A significant improvement in Eurozone economic indicators could make the euro more attractive.
• Downside risk: A drop in oil prices might weaken the MYR, further pushing down the EUR/MYR rate.
