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Post-BNM Move Proves Short Lived

MYR

The ringgit gained after the BNM tightened monetary conditions Thursday, defying a parallel upswing in the BBDXY index. Spot USD/MYR tumbled to mYR7375 before a dynamic rebound allowed it to return to positive territory.

  • Bank Negara Malaysia raised the Overnight Policy Rate by 25bp on Thursday, bringing it to 2.75%, as expected by most analysts. The central bank assessed that "inflationary pressures were more persistent than expected," while "the growth outlook remains subject to downside risks."
  • The BNM introduced some dovish caveats to its statement, noting that the rate hike was described as pre-emptive, with the current level of the OPR seen as accommodative, and emphasising that it is "not on any pre-set course" with respect to policy adjustments and will continue to act in a "measured and gradual manner."
  • Palm oil futures eased off multi-month highs Thursday, after the contract for January delivery rejected resistance from MYR4,500/MT. The tropical oil was weighed on by musings surrounding the impact of Fed tightening on global growth prospects and demand for commodities, as well as Russia's decision to resume the Black Sea Grain Initiative.
  • Spot USD/MYR deals +18 pips at MYR4.7453, with bulls looking for gains towards all-time highs of MYR4.8850. Bears need a fall through Oct 27 low of MYR4.7028 before taking aim at Oct 6 low of MYR4.6270.

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