Halister News

(Bloomberg) -- USD/MYR may test its 2015 high of 4.48 in medium term even if Malaysia’s central bank keeps its policy rate unchanged, as ringgit is still vulnerable to local and overseas factors, Bloomberg strategist David Finnerty writes.

• FX pair remains in a strong bull trend, after breaching resistance at Jan. 7 high of 4.4285 to post a fresh YTD high; its MACD is bullishly above zero and signal line
• Ringgit is being pressured lower due to various factors:
  • U.S. yields have risen sharply since President-elect Trump’s victory given his expansionist and potentially inflationary economic policies; Fed’s Yellen also signaled the central bank is close to hiking rates
  • Political pressure on PM Najib to resign has resurfaced with thousands of Malaysians gathering in Kuala Lumpur over the weekend to demand he step down
  • Investors are likely being spooked by BNM’s attempt to clamp down on trading of offshore forwards, with central bank intervening in FX market to slow down the pace of ringgit depreciation
• BNM will leave its overnight policy rate unchanged at 3.00%, according to all 17 economists in Bloomberg survey; decision due at 3:00pm local time Nov. 23
• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.