SGD/MYR Outlook:
Bearish, as the rate is below its recent average and near recent lows.
Key drivers:
• Rate gap: The Monetary Authority of Singapore is pursuing a more accommodative policy, contrasting with the US Federal Reserve's recent rate cuts supporting the MYR.
• Risk/commodities: Oil prices are currently above average, benefiting the MYR due to Malaysia's oil-related exports.
• One macro factor: Malaysia's economy is growing robustly, outperforming expectations, which puts pressure on the SGD relative to the MYR.
Range:
The SGD/MYR pair is expected to drift within its recent range, with potential challenges maintaining upward momentum.
What could change it:
• Upside risk: A stronger-than-expected economic recovery in Singapore could boost the SGD.
• Downside risk: Further weakness in the global economic outlook might exacerbate losses for the SGD.