Malaysia Affirms 2021 GDP Forecast, Sees Wider Fiscal Deficit

Spot USD/MYR changes hands +3 pips at MYR4.1555, holding a tight range as trading resumed in Kuala Lumpur after a public holiday in Malaysia. Participants scrutinise yesterday's pre-budget comments from FinMin Zafrul.

• Bears look for a slide through Jul 6 low of MYR4.1480 towards Jun 25 low of MYR4.1423. Meanwhile, should USD/MYR stage a rebound above the 50-DMA at MYR4.2006, bulls would be able to target Aug 18 high of MYR4.2450.
• The Finance Ministry released its first-ever pre-budget statement yesterday, noting that the 2022 federal budget will focus on the "recovery from the pandemic, rebuilding of national resilience and catalysing reforms" (as cited by BBG). The Ministry affirmed BNM's 2021 growth forecast of +3.0%-4.0% Y/Y, while raising fiscal deficit projection to 6.5%-7.0% of GDP from the 5.4% projected in the 2021 spending plan. This means that Malaysia's fiscal deficit will reach levels last seen during the Global Financial Crisis. The Finance Ministry reiterated that "there is a need to increase the statutory debt limit (currently at 60%) to provide additional fiscal space in strengthening the domestic economy". The budget is expected to be submitted to parliament in October.
• Malaysia's Markit M'fing PMI will hit the wires today, alongside a slew of PMI readings from across the region.