The Malaysian Ringgit (MYR) continued to weaken against the US Dollar (USD), with the USD/MYR pair pushing up towards the 4.14 handle at one point last week, according to OCBC strategists Sim Moh Siong and Christopher Wong [1]. Despite supportive domestic data, including firmer trade figures and contained inflation, the MYR's performance was overshadowed by external factors, particularly the ongoing strength of the US Dollar and elevated US Treasury yields driven by a hawkish repricing of Federal Reserve expectations [1].
The strategists noted that softer oil prices have provided some relief for risk sentiment and eased pressure on Malaysia's fiscal and subsidy outlook, but this has acted more as a buffer than a catalyst for MYR appreciation [1]. Domestic fundamentals for Malaysia remain broadly intact, but the earlier re-rating of the MYR appears to be largely reflected in current prices [1].
Technical analysis indicates that the USD/MYR pair last closed at 4.1360, with bullish momentum on the daily chart remaining intact and the Relative Strength Index (RSI) rising into overbought territory, suggesting a continued upside bias for the pair [1].
Looking ahead, OCBC expects the USD/MYR to stay better supported in the near term unless there is a decisive easing in US Treasury yields or a broader weakening of the US Dollar [1].
CONCLUSION
The Malaysian Ringgit remains under pressure due to strong external factors, particularly the firm US Dollar and elevated US yields, despite supportive domestic data. Market sentiment is cautious, with technicals pointing to further upside for USD/MYR unless US financial conditions ease. The outlook for the Ringgit is likely to remain subdued in the near term.