Malaysia's Trade Surplus Widens, Supporting MYR Against USD
Malaysia's currency, the Malaysian Ringgit (MYR), is experiencing strong fundamentals against the US Dollar (USD) due to a softer USD backdrop and robust domestic fundamentals, according to OCBC. The country's exports surged by 38.0% year-over-year in July, exceeding expectations, while its trade surplus widened to MYR22.5bn.
The strength of electronics exports and firmer palm oil prices is supporting Malaysia's external position. However, the immediate FX impact from this data may be tempered due to elevated Oil and long-end US Treasury yields. The USD/MYR rate last closed at 4.0450 levels, with bearish momentum on its daily chart intact but RSI fell into oversold conditions.
While there is a risk of a rebound in the short term, OCBC maintains a bias to lean against it due to the strong fundamentals supporting the MYR. The currency's current level is seen as relatively well-placed within the region, particularly if the USD pullback extends.