The exchange rate forecast for the Malaysian Ringgit (MYR) against the Chinese Yuan (CNY) amid recent developments indicates a cautious but potentially stable outlook for the MYR. As of late August 2025, analysts noted that the MYR was trading near its 3-month average against the CNY at 1.6950, remaining within a stable range of 2.1% from 1.6716 to 1.7070. This stability can be attributed to several factors affecting the MYR's resilience.
Following a recent 25 basis point rate cut by Bank Negara Malaysia, aimed at mitigating risks from global trade tensions, analysts suggest that the MYR might be supported by Malaysia's strong foreign reserves, which reached RM520.7 billion in Q1 2025. This significant reserve level enhances Malaysia's economic stability and buffers against external shocks.
Meanwhile, current trade negotiations with the U.S. to reduce import tariffs are a crucial factor for the MYR, with expectations of a favorable trade agreement by August 1, 2025, which may further bolster the currency. However, Malaysia's ongoing reforms and diversification efforts are essential for long-term economic resilience.
On the other hand, the CNY faces considerable pressure due to bearish market sentiment. Reports indicate that bearish positions on the CNY have reached their highest levels since mid-May, attributed to weak economic indicators such as lower retail sales and sluggish industrial output. The yuan's depreciation beyond the 7.3 level per dollar reflects ongoing struggles within China's economy, including declining property prices and lackluster fixed-asset investment growth. These factors may lead to a strained outlook for the CNY, as the market is anticipating further depreciation amid ongoing trade tensions with the U.S.
The anticipated stability of the yuan in the short term is overshadowed by concerns that prolonged economic challenges could push it towards further declines. The Chinese government’s control over currency value amidst economic recovery struggles suggests potential volatility in the currency market, which may spill over to influence the MYR/CNY exchange rate.
Overall, while recent developments indicate a level of stability for the MYR, ongoing external economic pressures and domestic policy adjustments will continue to play crucial roles in determining the future trajectory of the MYR against the CNY. Analysts recommend keeping a close watch on trade negotiations and economic indicators from both Malaysia and China to gauge any shifts in sentiment that could impact currency values. Additionally, fluctuations in oil prices, with recent data showing oil trading at $67.73, slightly below its 3-month average, could also influence the MYR, given Malaysia's status as a net oil exporter.
