MYR stands among lowest-yielding currencies

Malaysia's central bank gave clues about rebuilding FX reserves recently. This implies that MYR appreciation scope would be likely limited by official USD buying when there will be a rise in capital inflows.

MYR is one amongst the most vulnerable Asian currencies. FX reserves had a steep fall, the authorities might remain cautious in utilizing the limited reserves to cap the currency's fall

Market participants are observing the measures to encourage capital inflows and reduce capital outflows, with reduced capacity for a direct FX intervention. Nevertheless, there were very few strong measures taken till date.

"Instead, the local pension fund, the EPF, has noted its continued overseas investment activity. Furthermore, we note that the MYR now standsamong the lowest-yielding currencies in the offshore Asian NDF market after the recent collapse in NDF yields", says Barclays in a research note.