The recent exchange rate forecasts for the Malaysian Ringgit (MYR) to Japanese Yen (JPY) appear to be shaped significantly by geopolitical tensions and changes in trade policies, particularly stemming from actions by the U.S. administration. Analysts note that the imposition of a 24% reciprocal tariff on goods from Malaysia has raised concerns about the outlook for emerging Asian currencies, including the MYR. This has resulted in a negative sentiment among traders, leading to a decline in regional currencies as fears of a global trade war increase. Over the past week, the MYR has reached 30-day highs near 34.36, which is 2.4% above its three-month average of 33.55, showing some resilience in a volatile market.
For the JPY, the currency has acted as a safe-haven asset during times of uncertainty, which has historically led to its appreciation. The yen has been supported by ongoing geopolitical risks, particularly the situation in Eastern Europe, drawing investors into the currency as a precaution amid global economic stress. Additionally, the Bank of Japan's monetary policy continues to play a crucial role; current low interest rates may keep demand for the yen subdued, despite potential growth from the latest forecast adjustments for USD/JPY rates.
Forecasters indicate that any shift in Japan’s economic performance, specifically regarding trade surpluses and manufacturing outputs, could directly affect JPY’s strength against the MYR, particularly if the USD remains strong. Analysts at MUFG Research anticipate a gradual decline in the USD/JPY exchange rate, expected to reach 154.00 in Q1 2025, before descending to 148.00 by Q4 2025. This trend would hinge on external economic influences, including oil prices, which have recently been highly volatile—trading at $77.01, and significantly above the three-month average of $67.35.
The dynamics of oil prices could also affect the MYR, given Malaysia's status as a key oil exporter. Rising oil prices could support MYR by enhancing trade balances, while fluctuating costs might pressure the currency if global demand weakens. In summary, the MYR/JPY exchange rate outlook is interlinked with both ongoing geopolitical developments and economic fundamentals, suggesting that traders should stay vigilant to these shifts for more informed international transaction decisions.