/MYR: Easing From Record Highs, Policy Dynamics Remain In Focus

Spot SGD/MYR has traded on a heavier note at the start to this week, moving away from an all-time high printed on May 25 at MYR3.2057. The rate has shed 24 pips today and last deals at MYR3.1955 as its RSI crosses below the 70 threshold, backing off from overbought territory. This will constitute a bearish signal, if confirmed on a closing basis.

• The pair's sharp gains since early March were facilitated by the MAS' April decision to pre-emptively tighten policy by re-centring the S$NEER band and raising its slope. The move came on the back of upward tilts to the S$NEER band announced in January 2022 and in October 2021.
• By contrast, the BNM kept its OPR unchanged since the outbreak of the COVID-19 pandemic until May 11, when it raised the key interest rate by 25bp in defiance of consensus forecast looking for a stand-pat decision.
• As a result, the MAS can be said to have taken a more aggressive approach to fighting inflation to date, helping SGD/MYR climb to record highs. Relative monetary policy dynamics will remain under scrutiny going forward.
• From a technical point of view, a sell-off past Apr 26 high of MYR3.1769 would signal that earlier bullish momentum is petering out, encouraging bears to target May lows near the MYR3.1400 mark. Bulls look for a resumption of the uptrend, which could result in a breach of the MYR3.2057 historic high.