Ringgit Moves Closer To All-Time Lows, Faces Headwinds From Domestic Politics

Spot USD/MYR refreshed 24-year highs for the sixth consecutive session Monday, while gaining for the seventh day in a row. Upside pressure has abated in the wake of overnight risk rally, allowing the pair to ease off cyclical highs, at the margin. The rate last deals -17 pips at MYR4.7150, but a slide through Oct 6 low of MYR4.6270 is needed to fuel hopes for a deeper reversal. Bulls keep an eye on the record high of MYR4.8850.

• Palm oil futures rallied on Monday, with a negative feedback loop between ringgit strength and tropical oil prices in play. With spot USD/MYR rallying further towards all-time highs, contracts traded in Kuala Lumpur attracted bargain hunters. Participants continue to gauge factors affecting the demand outlook, including China's COVID-19 containment strategy.
• The political situation in Malaysia clouds the nation's fiscal outlook, generating headwinds for the ringgit. The ruling United Malays National Organisation party's electoral gambit left the recently tabled Budget 2023 in limbo and a hung parliament could potentially prevent a smooth passage of the spending plan.
• Malaysia's trade balance will cross the wires tomorrow. Headline trade surplus is expected to have widened to MYR17.30bn in September, per a Bloomberg survey of analysts. Consumer inflation data will conclude this week's data releases on Friday.