Bias: The MYR/SGD pair is bullish-to-range-bound, trading above the 90-day average and in the upper half of the 3-month range.
Key drivers:
• Rate gap: The Bank Negara Malaysia has adopted a more hawkish stance compared to the Monetary Authority of Singapore, which has eased their policy.
• Risk/commodities: Current oil prices are above their average, supporting the MYR due to Malaysia's strong commodity exports.
• Foreign Direct Investment: Increased inflows in technology and green energy sectors bolster demand for the MYR, attracting further investor interest.
Range: The MYR/SGD is likely to hold within its recent stable range as factors underpinning the MYR momentum are expected to persist.
What could change it:
• Upside risk: A further increase in global oil prices could reinforce the MYR's strength.
• Downside risk: A significant deterioration in Malaysia's trade performance would likely weaken the MYR against the SGD.