SGD/MYR Outlook: Slightly weaker, but likely to move sideways as the rate is below its recent average and near its recent lows.
Key drivers:
• Rate gap: The Monetary Authority of Singapore's monetary policy remains unchanged while Bank Negara Malaysia's stability has recently attracted support for the ringgit.
• Risk/commodities: Oil prices are currently above average, which tends to benefit the Malaysian ringgit given its exposure to oil exports, providing some upside support to the currency.
• One macro factor: Singapore's revised inflation forecasts indicate rising price pressures, which may challenge the SGD if growth does not keep pace.
Range: The SGD/MYR is expected to hold within its recent range, drifting closer to the lower end but testing resistance around the middle.
What could change it:
• Upside risk: A significant shift in global trade dynamics favoring Singapore could strengthen the SGD.
• Downside risk: A worsening of external economic conditions or geopolitical tensions may pressure the ringgit further, affecting the SGD/MYR rate.
