MYR to fall between 3.90 and 4.30 to USD – DBS

The MYR appreciated 3.7% y/y against the USD in the first 8.5 months to become the best performer this year. GBP was a distant second with gains of 1.7% and SGD third with 0.3%, notes DBS Senior FX Strategist Philip Wee.

BNM does not mind more likes

“Malaysia’s real GDP growth accelerated to 5.9% y-o-y in 2Q24, after rebounding to 4.2% in 1Q24 from 2.9% in 4Q23. Bank Negara Malaysia expects the overall recovery to be sustained in the second half of the year, fueled by higher demand for technology exports, more tourist arrivals supporting consumer spending and increased foreign investment in the semiconductor sector and hubs. AI data. “

“Although policymakers see growth near the top of this year’s official target of 4-5%, they do not expect inflation to exceed the 2-3.5% target. Therefore, the NBM is in no rush to cut interest rates, despite high expectations that the Fed will cut rates in September.”

“Given the MYR’s recovery from its worst levels since the Asian financial crisis, the BNM does not seem to be eyeing further currency appreciation. In February, the NBM disagreed with private sector estimates that the USD/MYR fair value should fall between $3.90 and $4.30, citing Malaysia’s positive economic outlook.