The exchange rate outlook for the Malaysian Ringgit (MYR) against the Japanese Yen (JPY) reflects increased volatility due to ongoing trade tensions and economic uncertainty in both regions. Analysts have noted that the MYR is currently trading near 7-day lows at approximately 33.94, which is 1.3% above its 3-month average of 33.49. The MYR has exhibited stability within a 7.4% range over recent months, fluctuating between 32.17 and 34.55.
Recent developments have put the MYR under pressure, particularly following the announcement by U.S. President Donald Trump of a 24% tariff on imports from Malaysia. Such tariffs, part of a broader strategy impacting several countries, have led to a pessimistic outlook for emerging Asian currencies, including the MYR. There are concerns that ongoing trade wars may hinder regional growth, with Malaysia's Prime Minister, Anwar Ibrahim, indicating the country's intention to coordinate a Southeast Asian response to these tariffs. This adds a layer of complexity to currency stability as market participants weigh potential retaliation and its economic implications.
In contrast, the JPY has solidified its position as a safe-haven currency amid global economic uncertainties. The Japanese Yen tends to appreciate during times of market stress, making it attractive to investors fleeing riskier assets. Forecasters have noted that despite recent depreciation against the U.S. dollar, which has been projected at around 154.00 for Q1 2025, the JPY could see a gradual recovery and decline to 148.00 by Q4 2025, with overall volatile market conditions potentially prompting a reassessment of these predictions.
Factors driving the JPY’s strength include Japan's monetary policy, with the Bank of Japan’s (BoJ) ultra-low interest rates influencing demand. There is a symbiotic relationship between the JPY and commodity prices, particularly oil. Current oil prices at 74.23, significantly above a 3-month average of 66.94, can directly impact the yen, given Japan's dependence on imported energy. As oil prices rise, it can lead to inflationary pressures that may influence the BoJ's monetary decisions and ultimately affect the JPY's exchange rate.
Overall, the MYR to JPY exchange rate is likely to remain pressured due to external trade challenges and internal economic factors in Malaysia, while the JPY stands to benefit from its safe-haven status and market dynamics, particularly related to Japan's economic performance and global risk sentiment. Investors should stay attentive to geopolitical developments, trade negotiations, and oil prices that could significantly influence this currency pairing in the months ahead.