The Malaysian Ringgit (MYR) has recently achieved a 13-month high against the Hong Kong Dollar (HKD), reflecting a favorable economic outlook for Malaysia and various supporting factors. Analysts attribute the MYR's strength to expectations surrounding a potential US Federal Reserve rate cut, Malaysia's robust economic performance, and a positive trade balance driven by strong export growth in sectors such as electronics and commodities. Furthermore, sustained foreign direct investment and the government's fiscal consolidation efforts have fostered greater investor confidence, thereby bolstering the MYR.
As of early December 2025, the MYR to HKD exchange rate has reached approximately 1.8937, which is about 2.0% higher than its three-month average of 1.8572. This steady upward movement is significant as the MYR has remained within a narrow range of 1.8372 to 1.8937 over the past three months. Expectations surrounding the ASEAN Summit's new trade agreements with the US, including tariff exemptions on over 1,700 products, further support the MYR's ascent.
Conversely, the HKD faces challenges following recent interest rate adjustments by the Hong Kong Monetary Authority (HKMA), which cut its base rate to 4.25%, aligning with similar cuts from the US. This move aims to stimulate Hong Kong's economy but also places the HKD under pressure due to increased capital inflows and notable interest rate differentials compared to the US. HKMA's interventions in the foreign exchange market, aimed at maintaining the currency's peg, have led to heightened market liquidity and a notable decline in Hong Kong Interbank Offered Rates (HIBOR).
Additionally, fluctuations in global oil prices are relevant, as oil is a critical export for Malaysia. While oil prices are currently at 14-day highs around 63.75 USD, they remain 1.5% below the three-month average, trading within a volatile range of approximately 60.96 to 70.13 USD. An increase in oil prices generally supports the MYR, influencing its performance against the HKD.
In summary, the MYR is likely to continue on its upward trajectory against the HKD in the short term, bolstered by strong economic fundamentals and external trade agreements, while the HKD may face ongoing pressure from macroeconomic adjustments and interest rate policies. Currency market participants should monitor these developments closely to make informed decisions.
