Ringgit Extends Losses Despite Below-Forecast GDP Contraction

Spot USD/MYR has extended yesterday's losses this morning and last trades +30 pips at MYR4.1205. Overnight risk aversion may have filtered through into onshore ringgit, keeping a lid on the currency, despite smaller than expected GDP contraction reported by BNM yesterday.

• Malaysian economy shrank 0.5% Y/Y in Q1 after a 3.4% contraction in the final quarter of 2020. The decline was less severe than forecast, with BBG consensus expecting a 0.9% dip. BNM flagged the positive impact of "improvement in domestic demand and robust exports performance," but the data did not cover MCO 3.0 imposed across the whole country earlier this week. Meanwhile, BoP current account balance narrowed more than expected to MYR12.3bn in Q1 from the revised MYR18.6bn.
• Defence Min Ismail Sabri said that the country will follow a standardised social distancing protocol. Elsewhere, the WHO lauded Malaysia's decision to implement a nationwide Movement Control Order as hospital capacity has reached a critical level.
• Malaysia's Director General of Health Noor Hisham said that 80% of new Covid-19 cases are linked to sporadic infections in the community rather than clusters.
• Malaysian economic docket is virtually empty through the end of this week.
• A break above May 6 high of MYR4.1267 would please bulls, opening up Apr 16 high ofMYR4.1318. Conversely, a slide through May 10 low of MYR4.0970 would turn focus to Apr 30 low of MYR4.0877.