OCBC notes USD/MYR has risen on renewed US–Iran tensions and broader risk‑off sentiment, despite stronger Malaysian Gross Domestic Product (GDP) and better foreign equity flows. With some policy support fading after Bank Negara Malaysia (BNM) held rates, the bank expects USD/MYR to stay supported if geopolitical risks remain elevated, though resilient domestic growth and improving portfolio flows should limit Ringgit weakness.

Geopolitics offsets solid Malaysia data

"USD/MYR moved higher into Fri’s close as renewed geopolitical tensions between US and Iran drove a broader risk-off move and lifted defensive USD demand. The move came despite stronger-than-expected 2Q26 GDP and an improvement in foreign equity flows, suggesting that the late-week selloff was driven more by external risk sentiment than domestic fundamentals."

"Earlier in the week, BNM’s decision to keep the OPR unchanged and fading expectations for a near-term rate hike may have removed some mild policy support for MYR, although local yields did not fall materially after the meeting."

"Elsewhere, lingering uncertainty ahead of the 1 Aug Negeri Sembilan election may also temper sentiment at the margin."

"Near term, USD/MYR may stay supported if geopolitical risks and risk aversion remain elevated, though resilient domestic growth and improving portfolio flows should help limit the extent of MYR weakness."

"Spot last closed at 4.0970 levels. Bearish momentum on daily chart shows signs of it waning while RSI rose."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)