MYR/TWD Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Bank Negara Malaysia's policies are relatively supportive compared to Taiwan’s Central Bank's non-intervention, influencing MYR strength against TWD.
• Risk/commodities: With oil prices currently above average, this supports the MYR as Malaysia is a significant oil exporter.
• One macro factor: Malaysia's projected fiscal consolidation efforts suggest improving financial stability, which could further support the MYR.
Range:
Expect MYR/TWD to hold within its recent 3-month range, currently trading near the upper level.
What could change it:
• Upside risk: Improved trade relations between the U.S. and China could enhance inflows into Malaysia, strengthening the MYR.
• Downside risk: Further volatility in the TWD due to economic pressures in Taiwan may weigh on the MYR’s performance as well.