Ringgit: Happy, yes. Lasting, maybe. Undervalued, still is.

I would like to reiterate, the Malaysian economy has not suddenly improved so much that the Ringgit appreciated so much and reached the highest level against Singapore dollar for past 6 months or highest level in 3 months versus US$. This was my same argument when Ringgit kept falling. The economy has not deteriorated so much that it deserved a fall of over 20 percent within one year. To be frank, any currency falling 20 percent within one year should at least already fall into a crisis, right? Else, why would it depreciate so much? Never mind, believe whatever we want believe. Just remember to take appropriate actions.

Some other comments about Ringgit below, from real experts in the field. Hong Leong Bank’s Head of Fixed Income & Economic Research, Choong Yin Pheng said, “It’s a sign the market has well received the recalibrated budget, which was more realistic and apt to the current scenario.”

Skandinaviska Enskilda Banken AB. : “The ringgit may outperform Asia emerging markets in 2016 as Brent starts to stabilise and given the currency’s 19% loss last year was perhaps a bit overdone.”

 

Sean Yokota, Singapore-based head of Asia strategy at SEB: “Oil prices are higher and that’s definitely helping the ringgit and the budget (recalibrated) was seen as pretty positive.”

United Overseas Bank (Malaysia) Bhd (UOB Malaysia) believes the ringgit will strengthen in the second half of the year.

Christopher Wong, senior FX analyst for Maybank in Singapore: “We expect continued SGD weakness amid sluggish external demand and ongoing domestic restructuring efforts to raise productivity. By contrast, views on MYR are positive due to relative stability in oil prices and resilient domestic demand. These are supporting sentiment.”

Yes, comments are generally positive during positive periods. When ringgit starts falling again, I will update with all the negative comments too. Just have to see if what Bloomberg’s survey of ringgit would come true. In a poll by Bloomberg, the ringgit is forecasted to go to the level of US1 to RM4.40 by year end. Happy getting the right investment exposure to maximise returns during this volatile market situation of oil prices.

written on 30 Jan 2016

next suggested article: Impossible, how can Ringgit be so attractive?

 

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