Recent forecasts indicate a challenging outlook for the US dollar (USD) against the Malaysian Ringgit (MYR), primarily driven by dovish sentiments surrounding the Federal Reserve’s monetary policy. Analysts have noted that the USD is under pressure due to expectations of interest rate cuts, particularly following disappointing ISM manufacturing PMI data that pointed to a deeper contraction in the US factory sector. A speech from Fed Chair Jerome Powell is anticipated to potentially reverse some of this negative sentiment; however, any hints of continued dovishness could lead to further weakness in the USD.
Concurrently, significant developments are supporting the MYR. The Ringgit has appreciated recently, reaching a 13-month high, largely due to positive economic projections and a stable monetary policy from Bank Negara Malaysia, which has maintained the Overnight Policy Rate at 3%. Analysts refer to Malaysia's impressive 5.2% GDP growth in Q3, bolstered by strong domestic consumption and export performance, as a key factor in the currency’s strength. Furthermore, favorable trade agreements secured during the ASEAN Summit are expected to enhance Malaysia's export prospects, thereby supporting the MYR.
The USD to MYR exchange rate is currently at 90-day lows near 4.1310, approximately 1.5% below its three-month average of 4.1935. This stability reflects a narrow trading range of 2.4% in recent weeks, indicating less volatility in the USD's performance against the MYR.
Additionally, movements in oil prices may influence the MYR, as Malaysia is a significant exporter of oil. Currently, oil prices are at USD 63.33, which is 2.4% below the three-month average of USD 64.90. The price volatility observed, with a 15.0% trading range from USD 60.96 to USD 70.13, suggests that fluctuations in oil could impact MYR further, contingent on global demand and supply dynamics.
In conclusion, while the USD faces downward pressure due to potential monetary easing and adverse economic data, the MYR is supported by robust domestic growth and stable policies, positioning the Ringgit favorably in the current market landscape. Investors and businesses should carefully monitor these developments to optimize their currency transactions accordingly.
