MYR/SGD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average, yet lacks a strong driving factor.
Key drivers:
• Rate gap: The Bank Negara Malaysia's recent monetary policies appear more supportive than those of the Monetary Authority of Singapore, influencing the MYR's strength relative to the SGD.
• Risk/commodities: Oil prices are currently high, which boosts Malaysia's revenues from exports and supports the MYR's value against the SGD.
• One macro factor: Malaysia's projected GDP growth of 5.1% adds confidence in the MYR amidst a stable economic outlook.
Range: Exchange rates are likely to move within the recent stable range, showing little drift.
What could change it:
• Upside risk: Stronger-than-expected foreign direct investment could lead to a more significant MYR appreciation.
• Downside risk: Any unexpected downgrades in Malaysia's economic outlook could weaken the MYR against the SGD.