The EUR to MYR exchange rate has shown recent stability, with the euro currently trading near 4.9011, which is at 7-day lows but just below its 3-month average. Analysts note that the EUR has maintained a stable range of 3.2%, fluctuating from 4.8340 to 4.9903. This stability comes amidst an improvement in German business sentiment, as reflected in the rise of the IFO business climate index, which could support a positive outlook for the euro if consumer confidence data follows suit.
Several key factors are influencing the euro's performance. The European Central Bank's (ECB) monetary policy decisions are paramount; a more hawkish stance could bolster the euro, while dovish approaches may lead to depreciation. Current economic indicators suggest a slight contraction in Eurozone activity, as indicated by a drop in the Composite Purchasing Managers' Index (PMI). Geopolitical events, particularly the ongoing war in Ukraine, continue to exert pressure on the euro, creating uncertainty and affecting energy supplies.
Conversely, the Malaysian Ringgit (MYR) has benefitted from a supportive economic environment, characterized by a steady growth trajectory, foreign investment inflows, and a positive trade surplus. Notably, Bank Negara Malaysia's decision to maintain the Overnight Policy Rate at 3.00% signals a cautious approach, essential in navigating external uncertainties. The recent U.S. Federal Reserve rate cuts have also weakened the US dollar, indirectly supporting the MYR.
Moreover, fluctuations in oil prices are noteworthy as the price of Brent Crude oil currently stands at USD 65.62, which is 1.4% below its 3-month average. Given the strong correlation between oil prices and the MYR, any trends in the oil market could further impact the exchange rate dynamics.
Looking ahead, the outlook for the EUR to MYR exchange rate will largely depend on the evolving economic landscape within the Eurozone, influenced by the ECB's policy decisions and geopolitical stability. Meanwhile, with Malaysia's resilient economic fundamentals and trade performance, the MYR may continue to exhibit strength against the euro in the near term.
