MYR/USD Outlook:
The MYR is slightly positive, trading above its recent average and near the mid-range of the last three months, supported by strong economic performance in Malaysia.
Key drivers:
• Rate gap: The stability of Bank Negara Malaysia's interest rates contrasts with recent rate movements by the Federal Reserve, helping to strengthen the MYR against the USD.
• Risk/commodities: Oil prices are at 90-day highs, reflecting strong demand which typically supports the MYR, given Malaysia's role as a significant oil exporter.
• One macro factor: Robust growth in Malaysia's construction sector, expanding significantly year-on-year, is boosting confidence in the MYR's stability.
Range:
The MYR/USD is likely to drift within its recent range, potentially testing the upper extremes if local fundamentals hold.
What could change it:
• Upside risk: Further increases in oil prices could provide additional support for the MYR.
• Downside risk: A shift in US monetary policy towards increasing interest rates could strengthen the USD, putting pressure on the MYR.
