HKD/MYR Outlook: Likely to decrease, as the rate is below its recent average and near recent lows, pressured by current developments in both economies.
Key drivers:
• Rate gap: The Hong Kong Monetary Authority's interventions have led to low interest rates, negatively impacting the HKD's appeal compared to the Malaysian Ringgit.
• Risk/commodities: With oil prices significantly above average, the MYR may strengthen as Malaysia benefits from higher commodity revenues, impacting HKD/MYR negatively.
• One macro factor: Malaysia's positive economic outlook, driven by stable growth in major trading partners, boosts confidence in the MYR, putting further pressure on the HKD.
Range: The HKD/MYR pair is likely to drift within the recent range as it continues to test lower extremes.
What could change it:
• Upside risk: An unexpected recovery in Hong Kong's economic indicators could improve demand for HKD.
• Downside risk: Further appreciation of the MYR against the USD could exacerbate pressure on the HKD, leading to deeper declines.