The exchange rate between the Malaysian Ringgit (MYR) and the Thai Baht (THB) is currently experiencing pressures from various economic factors in both countries. Recent forecasts indicate a cautious outlook, primarily influenced by changing interest rates and economic growth expectations.
In Malaysia, the Bank Negara Malaysia (BNM) recently cut the Overnight Policy Rate (OPR) to 2.75% for the first time in five years. Analysts expect the rate to remain stable through at least 2027 due to subdued inflation and steady economic growth. However, trade tensions, particularly with the U.S. imposing tariffs on Malaysian exports, could hinder economic momentum, impacting MYR performance. The MYR showed signs of appreciation, particularly influenced by trade developments, although it remains at 14-day lows around 7.5870 against the THB, 1.0% below its three-month average.
Conversely, the Thai Baht has also seen a reversal in its fortunes following a recent interest rate cut by the Bank of Thailand to a two-year low of 1.50%. This was in response to a weakening economy, particularly affected by tourism declines linked to U.S. tariffs. Notably, the Thai economy's growth forecast has been downgraded, which could further weigh on the Thai Baht. The Baht’s recent performance reflects a sensitive balance between domestic economic conditions and external pressures, such as changes in global oil prices.
Oil prices are also a significant factor influencing the MYR, given Malaysia's status as a net oil exporter. Currently, oil prices are hovering near 90-day lows at approximately $65.50 per barrel, significantly below the three-month average. This decline in oil prices may exert downside pressure on the MYR moving forward, especially considering the volatile trading range observed.
Overall, the MYR to THB exchange rate is likely to continue fluctuating due to these intertwined factors, including monetary policy decisions, trade relations, investor sentiment, and crude oil market dynamics. Currency analysts will be monitoring these developments closely, as they will impact both the MYR and THB in the coming weeks.
