KUALA LUMPUR: Bank Negara Malaysia may keep the overnight policy rate unchanged at 1.75 per cent at least until the third quarter (Q3) 2022 to provide support to the nascent economic recovery, Kenanga Research said.
Four days ago, the central bank's Monetary Policy Committee (MPC) chose to keep the OPR at 1.75 per cent, discounting any rising inflationary pressures.
"However, Bank Negara may be pressured into raising rates sooner than expected due to a hotter-than-expected inflation print and a faster-than-expected major central banks monetary policy normalisation due to the ongoing Russia-Ukraine crisis," Kenanga Research said in a note today.
Meanwhile, Kenanga Research said against the backdrop of Malaysia's narrowing yield premium over US Treasuries and rising US dollar index due to increased demand for safe-haven assets amid heightened geopolitical uncertainties, the ringgit managed to strengthen by 0.1 per cent against the greenback.
"The local note's appreciation, albeit marginal, was mainly driven by a surge in Brent crude oil price," it said.
Kenanga Research said regional currencies such as the Thai baht and Singapore dollar tracked the same path, mainly due to positive Q4 2021 gross domestic product (GDP) readings for both Singapore (5.9 per cent) and Thailand (1.9 per cent).
Bucking the trend, Indonesia rupiah (-0.1 per cent) and the Philippines peso (-0.1 per cent) weakened slightly against the US dollar as both currencies failed to outpace the strong US dollar uptrend due to global risk-off sentiment and the US Federal Reserve's hawkish tilt.