The MYR to EUR exchange rate remains stable, currently at 0.2026, which is within its recent three-month average, fluctuating in a narrow range of 0.2004 to 0.2069. Recent forecasts suggest a divergence in monetary policy direction between the European Central Bank (ECB) and Bank Negara Malaysia (BNM), which may impact future exchange rates.
The euro has recently strengthened following the ECB's decision to maintain interest rates amidst an upgraded growth forecast for 2025, indicating that risks to the Eurozone economy are balancing out. ECB officials have also raised the possibility that the current monetary policy is adequate unless medium-term inflation targets come under threat. Furthermore, the euro is gaining global prominence, with increased foreign interest in euro-denominated investments, despite concerns about its rapid appreciation against the U.S. dollar, which might affect export competitiveness.
On the Malaysian front, BNM has recently maintained its key interest rate at 2.75%, after a prior cut aimed at addressing global trade tensions. Analysts have expressed a positive outlook on the MYR, anticipating a potential appreciation against the U.S. dollar within a range of RM4.10 to RM4.15 by December 2025. However, external challenges, such as recently imposed U.S. tariffs on Malaysian exports, could hinder this momentum.
Both currencies are also influenced by commodity prices, particularly oil. The recent decline in Brent Crude OIL/USD pricing, now at 66.99, 2.9% below its three-month average, may exert pressure on the Malaysian economy, as it is closely tied to oil exports. The volatile nature of oil prices, which has seen significant movements within a 20.4% range, could affect the MYR's performance against the EUR in the near term.
Going forward, the euro's trajectory will largely depend on the ECB's policy stance and economic recovery in the Eurozone, while the MYR's outlook hinges on domestic economic resilience and external factors such as trade relations and commodity prices. The strength of both currencies will be shaped by these developments, and market participants will need to monitor these dynamics closely as they consider international transactions.
