Bias: Bearish-to-range-bound, as the HKD is currently below the 90-day average and within the lower half of its 3-month range.
Key drivers:
• Rate gap: The substantial interest rate differential, with near-zero rates for HKD compared to higher rates in USD, continues to pressure the HKD.
• Risk/commodities: Oil prices are currently above the 3-month average, which could support the MYR due to Malaysia's strong commodity exports, potentially weakening the HKD against the MYR.
• Malaysia's economic resilience: A projected GDP growth of 5.1% for 2025 signals strong economic performance, further bolstering confidence in the MYR.
Range: The HKD/MYR is likely to drift in the lower part of the 3-month range without significant changes in external factors.
What could change it:
• Upside risk: A substantial increase in interest rates from the Hong Kong monetary authorities could strengthen the HKD.
• Downside risk: Continued weakness in global risk appetite may lead to further depreciation of the HKD against the MYR.