MYR/JPY Outlook:
The MYR is currently 2.6% above its recent average and at 7-day highs, indicating a strong outlook. With solid economic growth in Malaysia and stable interest rates, the MYR is likely to increase.
Key drivers:
• Rate gap: The Bank Negara Malaysia's stable rate contrasts with the recent rate hikes by the Bank of Japan, benefiting the MYR.
• Risk/commodities: The global rise in oil prices is impacting Japan's import costs, putting pressure on the JPY and supporting the MYR.
• One macro factor: Malaysia's robust growth in the construction sector is attracting foreign investments, which boosts demand for the MYR.
Range:
The MYR/JPY exchange rate is expected to drift within its recent 3-month range, with potential for upward movement.
What could change it:
• Upside risk: A further spike in oil prices might increase pressure on the JPY, benefiting the MYR.
• Downside risk: If political instability in Japan leads to worsening fiscal concerns, it could weaken the JPY, impacting the MYR positively.