HKD/MYR Outlook:
Slightly weaker, but likely to move sideways, as the rate is below its recent average and trading near recent lows.
Key drivers:
• Rate gap: The interest rate differential favors the MYR due to recent Fed rate cuts, which has weakened the HKD relative to the MYR.
• Risk/commodities: Oil prices are currently above average, which typically supports the MYR, but volatility might complicate this in the short term.
• One macro factor: Malaysia's GDP growth of 5.2% in the third quarter reflects economic resilience, enhancing demand for the MYR.
Range:
The HKD/MYR rate is expected to hold in its recent range, likely testing both sides without making strong moves.
What could change it:
• Upside risk: A substantial rebound in global risk appetite could strengthen the HKD.
• Downside risk: Continued weakness in the HKD from further HKMA interventions due to pressure on the currency peg.