Bias: bearish-to-range-bound, as the SGD is below its 90-day average and in the lower half of the 3-month range.
Key drivers:
• Rate gap: The Monetary Authority of Singapore's recent easing of policy contrasts with improving economic conditions in Malaysia, which may favor the MYR.
• Risk/commodities: Crude oil prices have surged above their average, likely providing support to the MYR due to Malaysia's strong export sector.
• Economic growth outlook: Malaysia's projected GDP growth of 5.1% signals resilience, which strengthens the MYR against the SGD.
Range: Expect the SGD/MYR pair to hold within its recent range, as recent trends show limited movement despite the current pressure on the SGD.
What could change it:
• Upside risk: A significant rise in global demand for oil could boost the MYR further, prompting a shift in the pair dynamics.
• Downside risk: Fluctuating inflation projections in Singapore could lead to further SGD depreciation against the MYR if uncertainties arise.