USD/MYR Tracking Higher, Q4 GDP Weaker Than Expected

USD/MYR is continuing to press higher, the pair moving above 4.3300, which is fresh highs back to mid Jan for the pair. The Jan 18th high around 4.3400 could be the next upside target, while note the 20-day EMA has bottomed and is drifting higher (last just under 4.3100).

• Earlier Q4 GDP came in weaker than expected at -2.6% q/q, (-1.9% forecast), which took y/y growth to 7.0%, which still firmer than the 6.7% forecast. We were at +14% in Q3 though, so growth momentum clearly slowed.
• BNM noted a still resilient domestic growth backdrop, which helped offset a sharp slowing in exports and investment spending (manufacturing activity also cooled). The central bank doesn't expect a recession this year, but is mindful of external risks. Inflation pressures are expected to ease further this year but stay at an elevated level.
• BNM will update its forecasts on Feb 24.
• Other data showed the current account surplus remaining healthy, +25.7bn MYR, but this may come down this year, as the terms of trade backdrop is less favorable. Still, with FX reserves now back to $115bn (versus 104.50bn in mid Oct last year), the BNM has room to manage renewed MYR depreciation pressures.