MYR vulnerable as fundamentals deteriorate

Lower oil, a high level of foreign ownership of local bonds, increased level of Malaysia's offshore borrowing and the recent increase in political noise have all hurt the MYR relative to other Asia FX. 

Although recent efforts by the BNM have helped to smooth spot movements, the pressure on the currency is evident in FX forwards. 

"The 12m NDF implied yield stands at 4.2% versus the BNM's policy rate of 3.25%, suggesting that the market is wary of further currency depreciation and/or expects a tightening in monetary conditions to stabilize the situation", says Barclays.