MYR/TWD Outlook:
Slightly positive, but likely to move sideways as the exchange rate is above its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Malaysian central bank's interest rate decisions have been favorable compared to the Taiwanese central bank's, supporting a stronger MYR.
• Risk/commodities: Recent increases in oil prices, which are above their 3-month average, help boost the MYR as Malaysia is a net exporter of oil.
• One macro factor: Malaysia's robust GDP growth, driven by domestic consumption and exports, continues to support investor confidence.
Range:
The MYR/TWD is likely to hold within its recent 3-month range as current pressures may keep it stable without significant movements.
What could change it:
• Upside risk: Further positive developments in Malaysia's fiscal consolidation efforts could lead to a stronger MYR.
• Downside risk: Increased volatility in Taiwan's export sector could pressure the TWD, impacting the MYR/TWD rate.