The Malaysian Ringgit and Thai Baht face persistent depreciatory pressures

Stephen Innes SPI Asset Management

The USD/MYR pair is trading above 4.80, marking a 4.5% decline year-to-date for the Malaysian ringgit against the US dollar.

Bank Negara Malaysia (BNM) appears relatively unconcerned about this weakness, potentially signalling a continuation of the downward trend for the ringgit. BNM has attributed the ringgit's decline to the strengthening of the US dollar and uncertainties in China's economy rather than domestic indicators.

However, the ongoing reduction in Malaysia's trade surplus adds to the MYR's challenges, given persistent external pressures and fragile demand from China.

While the weak ringgit benefits exporters in Malaysia's trade-dependent economy, stubbornly high global inflation has dampened product demand, suggesting a between a rock and a hard place dynamic for the currency.

However, the weaker MYR could ostensibly benefit the travel industry in Malaysia in the short term. Hence, we continue to think 4.80 is an overshoot, especially with expectations of a rate cut by the Federal Reserve in the year's second half.

Meanwhile, the USD/THB pair has surged above the 36-handle, indicating a 5.5% decline year-to-date for the Thai baht against the US dollar.

Thai Prime Minister Srettha has pressured the Bank of Thailand (BoT) to reduce policy rates following disappointing Q4 GDP figures, which showed a 0.6% quarter-on-quarter decline (1.7% year-on-year).

PM Srettha has called for an off-cycle policy meeting to implement an emergency rate cut despite the next official BoT policy meeting scheduled for April 10. The discussion of rate cuts has intensified following the release of the GDP figures, so traders have been buying USD/THB recently.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.