MYR/CNY Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Bank Negara Malaysia's interest rate stance is currently more favorable for the MYR compared to the People's Bank of China, which is pursuing a moderately loose monetary policy.
• Risk/commodities: Recent oil prices have shown volatility, trading significantly above their average, which typically supports the MYR due to Malaysia's status as an oil exporter.
• One macro factor: Malaysia's GDP growth remains strong at 5.2%, which bolsters confidence in the MYR amidst global economic uncertainties.
Range:
The MYR/CNY rate is expected to hold within its recent range, supported by stable economic conditions.
What could change it:
• Upside risk: A substantial increase in oil prices could lead to a stronger MYR.
• Downside risk: Weakening economic data from China could pressure the MYR against the CNY.