Malaysia: What’s happening to the ringgit? – ING


Prakash Sakpal, economist at ING, believes that the latest selloff in Malaysian government bonds and the ringgit (MYR) is overdone as nothing has changed in country’s economic fundamentals to warrant such a sudden shift in investor sentiment.

Key Quotes

“Growth continues to be softer, in keeping with a broader global trend. The economy posted negative inflation in recent months (-0.7% year-on-year in January and -0.4% in February), thus paving the way for a BNM policy easing. The BNM has recently signalled continued policy accommodation.”

“We believe a rate cut is more likely than not at the next meeting on 7 May. As such, the current economic trends have been government bond-friendly, even as weak public finances and a high level of public sector debt remain a long-term negative.”

“As for the currency, Malaysia’s external payment position remains sound, with a current account surplus at 2-3% of GDP sustaining the MYR's appreciation. This is further supported by the currency's prevailing undervaluation on a real effective basis. Among other things, a softer US dollar environment and rising global oil prices also help.”

“Such a backdrop leads us to a view that the current sell-off in both government bonds and the currency is overdone. We maintain our view of the USD/MYR trading to 4.05 by end-2018 (spot 4.15).”

“Prime Minister Mahathir Mohamad, well-known for his erstwhile policy of capital controls, has wasted no time in warning the speculators.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD consolidating as markets digest the new US-Sino trade truce

EUR/UDS is trading around 1.1030, little changed. Markets are digesting the US-Sino handshake deal that prevents new US tariffs that were planned for Tuesday. Euro-zone industrial output is due out.

EUR/USD News

GBP/USD slips below 1.26 as Brexit talks drag

GBP/USD has kicked off the new week with a drop below 1.26 as Brexit optimism fades. Intense weekend talks have failed to result in an accord. Negotiations continue ahead of the EU Summit. 

GBP/USD News

USD/JPY consolidating bull rally into 108 handle on US/Sino trade deal optimism

USD/JPY starts out the week flat to Friday's close after markets rallied at the end of the week. Bullish geopolitical undertones in the form of a US/Sino 'phase 1' trade deal help lift USD/JPY onto the 108 handle.

USD/JPY News

Gold sellers cheer US-China trade optimism against all odds

With the US and China near to end the two-year-old trade tussle, Gold bears give little importance to doubts over soft Brexit and tension surrounding Syria while flashing $1,484.70 as a quote during Monday’s Asian session.

Gold News

Forex Today: Markets skeptical about US-Sino trade truce and sterling suffers a hangover as talks continue

Markets are cautious regarding the US-Sino partial trade deal. The world's largest economy agreed on a "hand-shake" agreement which is yet to be written. It includes a Chinese commitment to buy agrifoods.

Read more

Forex MAJORS

Cryptocurrencies

Signatures