MYR/VND Outlook:
The MYR is currently trading 2.6% above its 3-month average, indicating a bullish outlook. The rate is on the upper end of its recent range, supported by Malaysia's strong economic performance and increased foreign investment.
Key drivers:
• Rate gap: The Malaysian central bank has maintained a stable policy rate, while the U.S. Federal Reserve has cut interest rates, which tends to support the MYR against the VND.
• Risk/commodities: Oil prices are at 90-day highs, impacting the MYR positively as Malaysia is a net oil exporter.
• One macro factor: Malaysia's GDP grew by 5.2% in the third quarter, boosting confidence in the MYR.
Range:
Expect the MYR/VND to hold within its recent range, possibly testing the higher end.
What could change it:
• Upside risk: Further increases in foreign direct investment could strengthen the MYR.
• Downside risk: A widening trade imbalance or increased liquidity pressure in Vietnam could weaken the VND further.