MYR/HKD Outlook:
The MYR is currently trading significantly above its 90-day average and is near the high end of its recent range. This suggests a bullish outlook, driven by strong economic performance in Malaysia.
Key drivers:
• Rate gap: The difference in interest rates is narrowing, as Bank Negara Malaysia maintains its rate while the U.S. Federal Reserve slows its hikes.
• Risk/commodities: Oil prices are at 90-day highs, which supports the MYR given Malaysia’s significant oil exports.
• One macro factor: Strong GDP growth in Malaysia indicates robust domestic consumption and investment.
Range:
Expect the MYR/HKD to hold within its recent range while testing the higher end.
What could change it:
• Upside risk: Continued strong foreign direct investment could further strengthen the MYR.
• Downside risk: Rising global interest rates may detract from MYR strength.