MYR/HKD Outlook:
The MYR is currently trading above its recent average and near recent highs, showing strength against the HKD. This trend is backed by solid economic growth and investor confidence in Malaysia.
Key drivers:
- Rate gap: The Malaysian central bank's stable interest rates compared to ongoing rate cuts in other regions favor the MYR's performance.
- Risk/commodities: With oil prices at 90-day highs, the stronger Malaysian economy benefits from rising commodity prices, further supporting the MYR.
- One macro factor: Malaysia's construction sector is expanding, contributing to a robust economic outlook that enhances demand for the MYR.
Range:
The MYR is likely to hold within its recent range, potentially testing the upper limits.
What could change it:
- Upside risk: Continued foreign investment inflows into Malaysia's tech sector could further boost MYR strength.
- Downside risk: Increased interventions by the HKMA to stabilize the HKD amid capital outflows may exert downward pressure on the MYR/HKD exchange rate.
