Weak MYR likely to prevent BNM from further tightening till 2016

MYR has been the least performing Emerging market currency for the past one year, its alue kept depreciating against USD. Several uncertainities like China's slowdown, degrading in the ratings, commodity price slippage hit the ringitt badly.

Morever, Malaysia's growth is slowing and the performnce of MYR is also weak, preventing the central bank BNM to take policy actions, this might continue through 2016. Being more vulnerable to external shocks, MYR's weakness might definetely effect the rate hike action of its central bank.

"While we believe that the pressure on the MYR will prevent BNM from cutting rates, we expect the bank to maintain a cautious stance overall, and do not see it as mounting any interest rate defence of the MYR", says Barclays. 

Due to the administrative measures like spike in goods and services tax and underlying grwoth conditions that are firming, BNM might likely be more comfortable with MYR being weaker currency till the domestic conditions are unchanged.