Ringgit Treads Water, Malaysia Says It Remains Fiscally Stable

Spot USD/MYR surged to its highest point since the outbreak of the COVID-19 pandemic, as the risk of more aggressive Fed tightening reduced demand for EM currencies, while headwinds to Malaysia's palm oil industry sparked concerns locally.

• The pair last deals at MYR4.4440, little changed on the day, with bullish technical focus oriented towards Mar 23, 2020 high of MYR4.4490. Bears look for a retreat under the 50-DMA, which intersects at MYR4.3998, near a layer of support from mid-late June.
• Palm oil futures traded in Kuala Lumpur faltered on Thursday, despite concerns about labour shortages in Malaysia. Prices were weighed on by the prospect of more output from top producer Indonesia, which is ramping up shipments to ease the glut caused by the earlier temporary export ban.
• Meanwhile, the national task force on inflation said the local palm oil industry has agreed on a phased reduction of the prices of cooking oil, based on the market price of CPO.
• FinMin Zafrul insisted that Malaysia is fiscally stable, pushing back against social media reports claiming the contrary. He noted that 97% of debt is denominated in ringgit, limiting Malaysia's exposure to FX risks.
• Next week's data highlights include trade data (Wednesday) & CPI (Friday).