MYR/HKD Outlook: The outlook for MYR/HKD is bullish as the exchange rate is significantly above its recent average and near recent highs, supported by strong economic fundamentals in Malaysia.
Key drivers:
• Rate gap: The Malaysian central bank is positioned to benefit from anticipated US interest rate cuts, which may support the MYR relative to the HKD.
• Risk/commodities: The recent rise in oil prices has improved Malaysia's trade surplus, bolstering demand for the MYR as the country's economy is closely tied to commodity exports.
• One macro factor: Malaysia’s projected GDP growth of 5.1% in 2025 further enhances investor confidence in the MYR, potentially attracting more foreign investment.
Range: MYR/HKD is likely to drift within its stable range, testing upper extremes as demand for the MYR remains solid.
What could change it:
• Upside risk: Strengthened foreign direct investment inflows in Malaysia could amplify MYR appreciation.
• Downside risk: A sudden drop in oil prices could weaken demand for the MYR, potentially impacting its value against the HKD.