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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MYR
As was the case at yesterday's open, USD/MYR was sharply weaker in the first part of trade. The pair touched 4.6768, fresh lows back to mid-Jan. We have stabilized somewhat since then, last just above 4.69. We are still +0.30% firmer in ringgit terms. The currency is still the top performer in the EM Asia space over the past week, up nearly 1.2%.
- Late yesterday, the BNM left rates on hold, as widely expected. A number of sell-side analysts expect the BNM to remain on hold this year, albeit watching how the subsidy rationalization program unfolds.
- The central bank characterized MYR as undervalued and that it continues to encourage government linked corporations to repatriate offshore earnings. The latter has been a key turnaround in MYR's fortunes since it became a focus point for the authorities and the Prime Minister.
- It's difficult to gauge when the authorities might be more comfortable with the MYR FX backdrop. For USD/MYR, levels at the start of the year near 4.6000 might be a focus point (which would be 4-5% off recent highs above 4.80).
- The chart below plots the J.P. Morgan MYR NEER (white line) and REER (orange line) levels. A NEER back towards 84.00 the rough mid-point of the past range of the year may also bring comfort. The REER remains very depressed though.
Fig 1: MYR NEER and REER Trends
Source: J.P. Morgan/MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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