Ringgit Firms As FinMin Zafrul Sees Space For Monetary Tightening, MPOB Data On Tap This Week

Spot USD/MYR has eased off in morning trade, likely as a function of greenback underperformance after hours last Friday, with comments from FinMin Zafrul possible lending some support to the ringgit. The pair deals -33 pips at MYR4.7448, with bears looking for a slide through Oct 27 low of MYR4.7028 and bulls targeting the all-time high of MYR7.8850.

• Friday saw an extension of gains for most actively traded palm oil futures, while high-frequency data from Intertek showed that the Malaysia's palm oil exports rose 65% M/M in the first five days of the month. On the other hand, senior industry figures Mistry and Mielke said palm oil's record-wide discounts to rival soyoil is unsustainable, while weekend reports downplaying the potential for relaxation of China's COVID-Zero protocol bode ill for demand outlook. Reminder that Thursday will see the release of the monthly Malaysian Palm Oil Board report, with BBG consensus looking for a continued increase in stockpiles.
• Strong economic growth leaves Malaysia ample room to tighten monetary policy, Finance Minister Zafrul told Bloomberg on Saturday. While the BNM has raised its Overnight Policy Rate at each of its last four monetary policy meetings, it has been tightening in a "measured and gradual" manner, by relatively small 25bpincrements. Malaysia's finance czar said he expects the upcoming Q3 GDP report to beat expectations.
• Political uncertainty is set to generate headwinds for the ringgit, as certain idiosyncratic features of Malaysia's upcoming general election hinder attempts to predict the outcome.
• Malaysian data highlights this week include industrial output (Tuesday), as well as BoP current account balance & GDP (Friday).