Post-BNM Ringgit Gains Prove Short-Lived

Spot USD/MYR has regained poise, clawing back losses registered after a surprise rate hike from the BNM, as local participants have digested above-forecast U.S. inflation data released after hours on Wednesday.

• The rate last deals +60 pips at MYR4.3835, with key near-term resistance defined at MYR4.3855-57. This area capped gains over the past few days. A clean break here would open up Apr 22 high of MYR4.4032. Bears keep an eye on May 5 low of MYR4.3337.
• Bank Negara Malaysia raised the Overnight Policy Rate by 25bp on Wednesday as "the unprecedented conditions that necessitated" trimming the benchmark interest rate to historic lows during the pandemic of Covid-19 "have since abated."
• Consensus called for no change to the OPR, but a minority of 5 (out of 19) analysts surveyed by BBG correctly predicted the actual outcome.
• The BNM observed that "growth is on a firmer footing, driven by strengthening domestic demand amid sustained export growth," while "inflationary pressures have increased sharply."
• Going forward, the withdrawal of stimulus "will be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support a sustainable economic growth in an environment of price stability."
• After a brief pause in domestic risk events today, Malaysia's Department of Statistics will publish BoP current account balance & GDP data on Friday.