USD/MYR: Ringgit to thrive next year after recent drop in crude palm oil – MUFG

FXStreet Insights Team FXStreet

Crude palm oil prices have swiftly retreated in recent months, due to oversupply and demand concerns. In Malaysia, this is likely to be offset by an import growth slowdown and tourism recovery. The crude palm oil outlook is hence slightly bearish for the ringgit, economists at MUFG Bank report.

Crude palm oil outlook very slightly MYR-negative

“The crude palm oil outlook is slightly bearish for the MYR. This is because of the fact that crude palm oil exports are likely to be a secondary driver to Malaysia’s current account dynamics. Tourism is expected to more than offset a slight reduction in the contribution to the current account balance.”

“We forecast some improvements in the MYR in 2023. After an expected 4.75 for USD/MYR at the end of 2022, we forecast it to head lower to 4.65 in Q2-2023 and 4.60 in Q3-2023.”

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