HKD/MYR Outlook:
The HKD/MYR exchange rate is likely to decrease as the HKD is currently trading below its recent average and near recent lows. This trend is compounded by a combination of factors affecting both currencies.
Key drivers:
- Rate gap: The Hong Kong Monetary Authority's (HKMA) interventions have not sufficiently countered the strength of the Malaysian Ringgit, which has benefited from economic resilience and targeted investments.
- Risk/commodities: Oil prices have reached near 90-day highs, affecting the MYR positively as Malaysia is a significant oil producer, thereby increasing demand for the MYR.
- One macro factor: Continued robust performance in Malaysia’s construction sector has supported the MYR's strength, attracting foreign investments and boosting its value.
Range:
Expect the HKD/MYR to hold within its recent range, reflecting limited upward movement due to current economic pressures.
What could change it:
- Upside risk: An increase in HKMA interventions could unexpectedly strengthen the HKD.
- Downside risk: Any deterioration in Malaysia's economic indicators may weaken investor confidence and support the MYR further.
