MYR set to fall between 3.90 and 4.30 to the USD – DBS
19.08.2024, 14:15

MYR set to fall between 3.90 and 4.30 to the USD – DBS

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

BNM does not mind more appreciation

“Malaysia’s real GDP growth accelerated to 5.9% YoY in 2Q24 following its rebound to 4.2% in 1Q24 from 2.9% in 4Q23. Bank Negara Malaysia expects the broad-based recovery to be sustained in the second half of the year, fuelled by higher demand for tech exports, more tourist arrivals underpinning consumption spending, and investment growth from foreign investments in the semiconductor sector and AI data centres.”

“Although policymakers see growth near the top of this year’s official 4-5% target, they do not expect inflation to breach the 2-3.5% target. Hence, BNM is in no hurry to reduce interest rates despite the wide expectations for the Fed to lower rates in September.” 

“Given the MYR’s recovery from its worst levels since the Asian financial crisis, BNM does not appear to mind more appreciation in the currency. In February, BNM did not disagree with private sector estimates that the fair value of USD/MYR should fall between 3.90 and 4.30 to the USD, citing Malaysia’s positive economic prospects.”

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