MYR (Malaysian Ringgit)

[winston]

Money changers run out of Malaysian ringgit by Linette Lim

SINGAPORE - Some money changers in Singapore on Friday ran out of Malaysian ringgit notes after the favourable exchange rate sparked strong interest from buyers taking the chance to stretch their dollar by picking up ringgit on the cheap.

The Singapore dollar is trading at one to 2.51 Malaysian ringgit, after hitting a 14-year high against the Malaysian currency this week.

The ringgit is under pressure as Malaysia's general election looms and as investors exit emerging Asian markets for safer assets.

Sim Moh Siong, a currency strategist at Bank of Singapore, said: "I think part of the under-performance could be due to the drop in commodity prices, especially in terms of crude oil and palm oil. That seems to be an overhang on the ringgit."

Currency analysts said the ringgit could weaken further this year, on risks from Malaysia's upcoming general election.

This could push the Singapore dollar to 2.55 versus the ringgit within the year, before moderating to 2.45 by end-2013.

Saktiandi Supaat, who is head of currency research at Maybank, said: "It's a reflection also of how market participants see Malaysian assets and also the tolerance level of Bank Negara in terms of allowing some flexibility in the ringgit.

"The ringgit has fluctuated or reacted more than the Singapore dollar to Eurozone and global risks such as growth issues. The structural issues on Singapore dollar restrict the way it reacts."

Global economic uncertainty has caused investors to pull money out of riskier assets like emerging-Asia currencies as they opt for safe haven assets like the US dollar.

The Singapore dollar has also been attracting these investors.

It has appreciated 2.5 per cent against the Thai baht and Indonesian rupiah this year.

Lee Chen Hoay, an investment analyst at Phillip Futures, said: "Because of the Eurozone crisis, it has increased the risk aversion in the market. And you even see things like Switzerland and Denmark being able to issue bonds at negative yield.

"So that means investors are willing to pay more money to get less, to protect their capital. And Singapore, being the only Southeast Asian currency with triple A, has an increased appeal."

Analysts said that should the Singapore dollar continue strengthening versus the ringgit, Singapore companies with operations in Malaysia could see profits take a hit.

However, Malaysian companies with operations in Singapore may see currency gains as they repatriate profits.

Source: CHANNEL NEWSASIA

http://www.todayonline.com/Singapore/ED ... an-ringgit

[kennynah]

Brudder K,
say, Now i convert S$1ook = RM250k,, park in their FD and get 3% p.a.
Next year say ringgit weaken to S$100k = $230k. (I think you mean when RM strengthens)

end result : make RM20k plus additional 3% interest ........am i wrong in this concept?

this above is the objective. what if ringgit weakens further, say to S$100 = RM$260? that means the loss in FX is 4% only to be paid 3% interests.

last time, i mentioned that one has to separate between investing in yield returns and a fx bet. in most instances, one cannot have both usually. it is becos of demand and supply.

[Chinaman]

Brudder K,
say, Now i convert S$1ook = RM250k,, park in their FD and get 3% p.a.
Next year say ringgit weaken to S$100k = $230k. (I think you mean when RM strengthens)

end result : make RM20k plus additional 3% interest ........am i wrong in this concept?

this above is the objective. what if ringgit weakens further, say to S$100 = RM$260? that means the loss in FX is 4% only to be paid 3% interests.

last time, i mentioned that one has to separate between investing in yield returns and a fx bet. in most instances, one cannot have both usually. it is becos of demand and supply.

ringgit weaken to S$100k = $230k. (I think you mean when RM strengthens)
Yar lor, me confuse in FX term....oh lidat mean ringgit strengthen...ok learn something new.

Actually. I m looking to park my cash (short term ) in MYR with yield say 3% and hopefully ringgit strengthen i a few mths times...Brudder how about Thai Baht isit a good bet? now 100S$ = 2480 THB and FD giving aro 4% p.a., yr expert view.

[kennynah]

ringgit weaken to S$100k = $230k. (I think you mean when RM strengthens)
Yar lor, me confuse in FX term....oh lidat mean ringgit strengthen...ok learn something new.

Actually. I m looking to park my cash (short term ) in MYR with yield say 3% and hopefully ringgit strengthen i a few mths times...Brudder how about Thai Baht isit a good bet? now 100S$ = 2480 THB and FD giving aro 4% p.a., yr expert view.

bro... i no expert and have not followed thai baht currency. so afraid i have no opinion on this investment. pai seh

but on MYR, it could be a safe bet by depositing in MYR in JB, just that if you are planning on investing in huge sums, better to hedge it by selling MYR in fx market. in the end, you will obtain a <3% becos of fx exchange losses. it could still be better than <1% in SGD deposits.

[tonylim]

MYR continues its weakness against major currencies.

[kennynah]

good for going to genting...

[winston]

vested

Ringgit down vs SGD on Singapore FX policy surprise By Cindy Yeap

KUALA LUMPUR (Oct 12): The Malaysian ringgit slid to its weakest in a month against the Singapore dollar, after Singapore’s central bank on Friday unexpectedly kept a hawkish monetary stance, resulting in the strengthening of the dollar.

The ringgit weakened as much as 0.41% to 2.5087 versus the Singapore dollar, the lowest since hitting intra-day low of 2.5120 on Sept 13. This happened even as the Singapore dollar jumped to $1.2199 against the US dollar, its strongest since Sept 14’s close, Bloomberg data showed.

At 3pm Friday, the ringgit was at 2.5038 to the Singapore dollar, 0.22% weaker from Thursday’s close of 2.4984.

The Monetary Authority of Singapore (MAS), which uses a strong currency to combat inflation, said on Friday that it will keep the current slope, midpoint and width of its currency trading band, while continuing to allow a modest and gradual appreciation of the Singapore dollar.

“With this announcement, we expect the Singapore dollar NEER (nominal effective exchange rate) to trade towards the top of the trade weighted band over the next few months,” Credit Suisse’s analyst Michael Wan wrote in a note after the policy decision.

Market experts had earlier expected room for policy easing by the MAS with the decline in core inflation to 2.2% in August.

But the MAS on Friday said core inflation rates will face upward pressure from higher costs of food and services.

http://sg.finance.yahoo.com/news/ringgi ... 03145.html

[winston]

Ringgit touches five-month low as US recovery boosts dollar

KUALA LUMPUR: The ringgit touched the weakest level since August on speculation investors are favouring the dollar because of an improving outlook for the US economy.

The currency pared its losses after the central bank intervened to limit its decline, according to two Asia-based traders who asked not to be identified because they aren’t authorised to speak publicly.

Inflation accelerated to the fastest pace in two years last month, a report showed yesterday. The Government forecasts the economy will grow between 5% and 5.5% in 2014, compared with between 4.5% and 5% last year. The 2013 data are due on Feb 12.

“Investors are putting back on the bullish-dollar view,” said Khoon Goh, a Singapore-based strategist at Australia & New Zealand Banking Group Ltd.

“We aren’t expecting any policy shift until we start to see further strengthening in Malaysian growth,” he said, referring to the possibility of interest-rate increases.

The currency was little changed at 3.3238 per dollar, compared with 3.3255 yesterday, according to data compiled by Bloomberg. It touched 3.3358 earlier, the weakest level since Aug 28. The Bloomberg US Dollar Index, which tracks the currency against 10 major counterparts, increased 1.3% this year, while the ringgit declined 1.4%.

Bank Negara sold dollars and bought the ringgit yesterday to limit the drop in the local currency, with offers to sell “modest” amounts of the greenback near the 3.3350 level, according to the two traders.

Source: Bloomberg

[winston]

vested

M'sia vulnerable to further outflows of foreign funds
Monday, 6 October 2014

By: IZWAN IDRIS

PETALING JAYA: Alarm bells are ringing among developing countries in Asia as potential huge outflow of foreign speculative funds threaten to wreak havoc across financial markets in the region.

A taste of what is to come was felt last month when the ringgit took a big hit, falling 4.1% against the US dollar, in tandem with sharp declines among regional currencies against the US dollar.

“Investors’ appetite for risk may begin to drop as the US policy becomes less accommodative and prospects for the first interest-rate hike become imminent,’’ RHB Research Institute said in a report.

But the local bourse was spared the brunt of the selldown, as foreign fund managers are relatively light on Malaysian equities. The bulk of their holdings of local assets are concentrated in the bond and money market.

It was estimated that overseas investors hold about 40% of Malaysian Government Securities (MGS).

“Given the high foreign holdings of MGS, Malaysia is indeed vulnerable to further outflows once the US Federal Reserve (Fed) starts to tighten,’’ economists at MIDF Research said in a note.

A banker said that based on previous trends, foreign shareholding of bonds tended to drop to 30% of the total MGS if there was flight of capital back to the United States.

“So the risk of a sell-down by foreigners should the United States raise interest rates persists,” said the banker.

According to statistics by Bank Negara last week, foreign investors trimmed their holdings on MGS by RM5.68bil to RM148.3bil as at end of August from a record RM154bil held in July.

The pace of the sell-off appeared to have quickened in September. The ringgit, which tumbled 4.1% against the US dollar, and the rupiah were among the worst hit currencies in Asia.

“Fund outflows in the third quarter of 2014 is likely to be much bigger than that seen post-sell off in May 2013 and in January this year when the United States started the taper programme,’’ MIDF Research said.

Foreign investors were net sellers of Malaysian equities last month as the FTSE Bursa Malaysia KL Composite Index dropped 1.36% to 1,840 points last Friday.

In Jakarta, the exodus of foreign funds from the stock market reached US$616mil in September, the biggest outflow since June 2013.

Credit Suisse saw the retreat in September as “first signs of foreign investor capitulation’’ following months of optimism that made several stock markets in the region among the best performing in 2014.

But the recent sell-off, which began in earnest in August, was less dramatic compared to the one that hit emerging markets in the middle of 2013.

Then, global investors rushed their exit after Fed chairman Ben Bernanke said the easy-money policy that fuelled soaring stock prices in developing Asia will be tapered down, signalling the end of easy monetary policy regime.

Janet Yellen, who took over from Bernanke in February this year, has alluded that the normalisation of monetary policy will not happen so soon as she wanted to see more definite signs such as lower unemployment rate in the United States.

The Fed is scehduled to complete tapering of asset purchases this month but the timing of the first rate hike by the Fed remains a big uncertainty.

Market expectation as well as statements by Fed officials suggest that the tightening cycle could start as early as middle of 2015.

Bank Negara had refrained from raising interest rate in September despite expectation it will continue to tighten following the first rate hike since 2011 in July.

“Bank Negara may want to save bullets for next year,’’ MIDF Research said, arguing that raising interest rates now “may not be the best option... to stem the outflow.”

The view is that the central bank is under no pressure to defend the ringgit as long as the ringgit’s movement is not in misalignment with other regional currencies.

“We see the rise in US dollar as a reflection of the stronger performance of the US economy, rather than a sign of increased risk aversion in the financial markets,’’ strategists at Schroder Investment Management Ltd wrote.

Source: The Star

[winston]

vested

Bank Negara keeping a close tab on the ringgit

Apart from requiring proper documentation from remitance agents, Bank Negara is also scrutinising companies and individuals making big investments overseas, in an effort to prevent outflow of the ringgit for speculative purposes.

At RM3.4713 to the US dollar yesterday, the ringgit is at its weakest level in about five years.

“Bank Negara is not against companies or individuals looking to make real investments. However, to ensure that people aren’t just selling down the ringgit for speculative purposes, Bank Negara will be interviewing some of these companies that have made recent investments,” says one source.

These measures by Bank Negara will certainly have an effect on many Malaysian companies that have made acquisitions overseas in recent times.

A recent big overseas transaction for example, would be Sime Darby Bhd, which is buying over the entire stake in New Britain Palm Oil Ltd (NBPOL) for £7.15 a share or £1.07bil (RM5.62bil) cash.

According to Gatehouse Bank, Malaysian funds have investments overseas totalling £4.91bil (RM27bil). These funds are either the Employees Provident Fund (EPF), the Retirement Fund Inc (KWAP) or Permodalan Nasional Bhd (PNB),

The EPF has also been actively making overseas investments.

This year, the EPF bought stakes in Arena Unit Trust, which owns three Tesco-anchored retail parks. Last year, it was involved in the London Battersea Power Station investment.

Meanwhile, the ringgit dropped 1.9% this month, making it one of the worst performing currencies in Asia. Between Nov 28 and Dec 1, the currency weakened by 2.5%, making it the biggest two-day decline in more than 16 years. At 3.4713 per dollar yesterday, this is the lowest since February 2010.

On Thursday, Bank Negara said in a “stern reminder” that all short-dated transactions requiring the exchange of ringgit for a foreign currency must be backed by underlying documentation.

Not everyone is seeing red over the weakening ringgit.

An economist with AllianceDBS says that with healthy current account surpluses together with steady international reserves, the ringgit should appreciate gradually against the US dollar in the near term.

“We see the ringgit trading at RM3.40 by year-end and RM3.35-RM3.40 by end-2015. Nonetheless, there is downside risk to the ringgit, if the fiscal deficit turns out to be worse than our current expectation,” he says.

The selloff in the ringgit was fuelled by the drop in oil prices, after the Organisation of Petroleum Exporting Countries’ decision last week to not cut production in order to shore up prices.

This was made worse when Petronas president and group chief executive Tan Sri Shamsul Azhar Abbas said that payments to the federal government in the form of dividends, tax and royalties could fall by 37% from the previous year to about RM43bil in 2015 if oil prices stay at around US$75 (RM258) per barrel.

Since July, Brent crude has dropped close to 40% from the US$110 level to US$69 as of yesterday.

Malaysia is currently the sole loser among Asia’s emerging markets from the decline in crude prices.

Based on AllianceDBS’s revised simulation study, if Tapis crude oil prices were to fall by US$10 per barrel from its earlier projection of an average of US$90 per barrel to US$80 per barrel for 2015, the Federal Government’s oil revenue is likely to decrease by about RM8bil.

In the mid-nineties, the ringgit was trading as a free float currency at around RM2.50 to the US dollar, The Asian financial crisis however brought the ringgit crashing to under RM3.80 to the dollar by the end of 1997.

In 1998, the currency fluctuated between RM3.80 and RM4.40 to the dollar. The Government pegged the ringgit to the US dollar in September 1998 at RM3.80 to the dollar value for some seven years. At the same time, the Ringgit also become non-tradable outside of Malaysia.

On July 21, 2005, Bank Negara announced the end of the peg to the US dollar, following China’s announcement of the end of the renminbi peg to the US dollar.

The ringgit was allowed to operate in a managed float against several managed currencies, so that this would enable the ringgit to trade closer to its perceived market value. Bank Negara has however intervened a few times to maintain stability in the trading of the ringgit.

The ringgit’s recent high of RM2.939 to the US dollar was on July 7, 2011. Since then, the ringgit has traded between RM3.10 and RM3.30 to the dollar.

Source: The Star