HKD/MYR Outlook:
Bearish, as the rate is below its recent average and near recent lows, influenced by a weak demand for HKD.
Key drivers:
• Rate gap: The Hong Kong Monetary Authority's interventions to maintain the HKD's peg are putting pressure on its value against the Malaysian ringgit, which is supported by strong economic growth.
• Risk/commodities: The recent downturn in oil prices, despite being above the 3-month average, indicates potential challenges for MYR, usually tied to economic performance in resource-dependent markets.
• One macro factor: Malaysia's robust GDP growth is boosting the MYR, reinforcing its strength compared to the HKD at this time.
Range:
The HKD/MYR exchange rate is likely to hold within its recent range as it seeks stability after this downturn.
What could change it:
• Upside risk: Renewed demand for HKD due to more aggressive interventions by the HKMA could strengthen its position.
• Downside risk: Any further weakening of oil prices could detract from MYR's gains, especially if global economic conditions deteriorate.