MYR/SGD Outlook:
The MYR/SGD exchange rate is likely to increase, currently trading well above its recent average and near recent highs. Several supportive factors are driving this trend.
Key drivers:
• Rate gap: Bank Negara Malaysia's stable monetary policy contrasts with recent easing measures from Singapore's Monetary Authority, strengthening the MYR against the SGD.
• Risk/commodities: The recent surge in oil prices, significantly above average levels, positively impacts the MYR due to Malaysia's oil export status.
• One macro factor: Strong economic performance in Malaysia's construction sector, showing substantial growth, boosts confidence in the MYR's stability.
Range:
Expect the MYR/SGD to hold its gains, with minor fluctuations within the recent 3-month range.
What could change it:
• Upside risk: A surge in foreign investments in Malaysia's tech sector could further strengthen the MYR.
• Downside risk: Renewed trade tensions affecting Singapore's export competitiveness could apply pressure to the SGD.