MYR/JPY 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 Malaysian central bank maintains a less aggressive stance compared to the Bank of Japan, which has recently raised rates.
• Risk/commodities: Oil is trading above its recent average, which generally supports the MYR as Malaysia is a net oil exporter.
• One macro factor: Malaysia's GDP growth indicates strong domestic demand, which can boost confidence in the MYR.
Range:
Expect movement to hold within the recent 3-month range, with occasional attempts to test extremes due to market volatility.
What could change it:
• Upside risk: A significant further rise in oil prices could strengthen demand for the MYR.
• Downside risk: Any unexpected hawkish moves by the Bank of Japan could lead to a stronger JPY and weaken the MYR.