MYR/JPY Outlook: Likely to increase, as the MYR is trading significantly above its recent average and near recent highs, backed by robust economic indicators.
Key drivers:
• Rate gap: The Bank Negara Malaysia maintains its overnight policy rate, while the Bank of Japan is tightening its monetary policy, which supports the MYR's strength against the JPY.
• Risk/commodities: Recent oil prices are at highs, contributing positively to Malaysia's economic outlook, thus benefiting the MYR as it relies on oil exports.
• One macro factor: Malaysia's economy shows resilience with expected growth from stable trading partners like China, enhancing the MYR’s position.
Range: The MYR/JPY rate is expected to hold steady and possibly drift higher within the recent 3-month range.
What could change it:
• Upside risk: A stronger-than-expected global economic recovery could further boost demand for the MYR.
• Downside risk: Any intervention by Japanese authorities to stabilize the yen could negatively impact the MYR/JPY rate.