EUR/MYR holds near 18-week high ahead of ECB policy move

The EUR/MYR currency pair held close to an 18-week high of 4.7057 on Wednesday ahead of the outcome of the European Central Bank’s policy meeting.

The ECB is largely expected to raise its main refinancing operations rate by 25 basis points to 2.40% at its June 11th meeting.

And, the ECB deposit facility rate is expected to be raised to 2.25%.

This move would make the central bank the first among its major peers to tighten policy in reaction to a surge in energy prices linked to the conflict in the Middle East.

ECB Executive Board member Isabel Schnabel had said that the central bank should move ahead with an interest rate hike in June, even if US peace talks with Iran are successful. She highlighted that the conflict had lasted significantly longer than anticipated and that elevated energy prices were increasingly affecting the wider economy.

And, ECB policy maker Francois Villeroy de Galhau again underscored that the central bank “will do what is necessary” to ensure inflation remains in line with its target.

Following the decision, ECB President Christine Lagarde is scheduled to hold a press conference to present the monetary policy statement and respond to questions from journalists. Any signals of a more aggressive tightening path or firm anti-inflation stance from ECB officials could offer additional near-term support to the Euro.

Geopolitical developments in the Middle East remain a key risk factor for currency markets. US President Donald Trump stated on Tuesday that he might have a proposal for the Iran agreement within days. Despite this, uncertainty surrounding the region remains elevated.

The EUR/MYR currency pair was last up 0.05% on the day to trade at 4.6914.