MYR/INR Outlook:
The MYR/INR exchange rate is likely to increase as the MYR is currently trading well above its recent average and near recent highs. Strong economic growth in Malaysia is supporting this upward momentum.
Key drivers:
• Rate gap: Bank Negara Malaysia's stable interest rate has helped the MYR gain an edge over the RBI's flexible exchange rate policy.
• Risk/commodities: Oil prices are at 90-day highs, which typically benefits the MYR due to Malaysia's status as a significant oil exporter.
• One macro factor: Malaysia's construction sector grew significantly, boosting economic confidence and, consequently, the MYR.
Range:
Expect the MYR/INR to test recent highs within a volatile trading range.
What could change it:
• An upside risk could arise from further strengthening of global oil prices, which would enhance the MYR.
• A downside risk may come from worsening geopolitical tensions affecting the INR, leading to heightened demand for safe-haven currencies.