MYR (Malaysian Ringgit)

[winston]

BNP Paribas holds nerve in shorting Malaysia as ringgit surges

KUALA LUMPUR, Oct 16 — A rebound in Malaysia’s ringgit will prove short-lived as the factors that made it Asia’s worst performer this year show few signs of going away, according to an investment arm of France’s largest bank.

“We’re in a situation where nothing’s changed, so therefore the only conclusion we have is that Malaysia remains a market to be short,” said Mark Capstick, a London-based fund manager at BNP Paribas Investment Partners, which oversees €532 billion (RM2.5 triillion).

“We’re short right across the board,” he said, adding that assets being bet against include the ringgit as well as the nation’s local-currency and global bonds.

While the ringgit has appreciated more than 6 per cent in October to rank among the top five in emerging markets, it’s been dogged by a persistent drop in oil prices, slowing Chinese growth and a probe of fund transfers into Prime Minister Datuk Seri Najib Razak’s bank accounts.

Malaysia’s currency is rebounding from a 17-year low reached in September as the receding prospect of a U.S. interest-rate increase in 2015 revives demand for higher- yielding assets worldwide.

Like BNP Paribas, Pacific Investment Management Co is also sticking to its guns and maintaining bets that the ringgit’s slide will resume.

Pimco, which oversees US$1.52 trillion (RM6.296 trillion), reported Oct. 1 it had short positions on emerging-market currencies including the ringgit, Thai baht and South Korea’s won.

Global funds have pulled RM41.5 billion from Malaysian debt and equities this year amid a 15 per cent slide in the ringgit.

The halving in Brent crude prices from a 2014 peak is crimping government revenue for Asia’s only major oil exporter, just as growth slows in China, Malaysia’s second- biggest export market.

Najib removal

Investor confidence has also soured because of rising debt at state investment company 1Malaysia Development Berhad (1MDB), whose advisory board the prime minister chairs.

Najib has drawn flack over 1MDB from lawmakers, including a call from former leader Tun Dr Mahathir Mohamad for him to step down. The company is in the course of selling assets to appease the criticism.

“My gut feeling is that people would like him to be removed but the chances of that happening are particularly slight,” said BNP’s Capstick.

“The political problems will just be a constant.”

There are a couple of “bright lights,” said Capstick, citing the winding down of 1MDB, the currency-swap lines Malaysia has with China and the “sizable” pension funds that the nation could fall back on.

The Employees Provident Fund had RM667 billion of assets as of June 2015, according to the state-controlled entity’s website.

The drop in Malaysia’s foreign-exchange reserves completes the “whole risk,” Capstick said, noting that the central bank will be looking to accumulate dollars during periods of ringgit gains, said Capstick.

The stockpile fell 20 per cent this year to US$93.3 billion in September, central bank data show.

“Malaysia remains a market to be short, although we have to accept that at times when the market takes a breather, you’re going to get these slight reversals,” he said.


Source: Bloomberg

http://www.themalaymailonline.com/money ... 5wH6G.dpuf

[winston]

Banks' dollar borrowing adds layer of risk to Malaysia's creeping crisis

* Ringgit down around 20 percent against dollar this year

* Malaysia overseas borrowings $98 bln, currency reserves $94 bln

* Bankers say foreign borrowings mostly offset by dollar lending

* Current account surplus shrinking, forecast $2.6 bln in 2016

* Corruptions scandal seen creating policy uncertainty

Source: Reuters

http://www.trust.org/item/2015110821024 ... larTheWire

[winston]

Ringgit extremely undervalued, says StanChart

KUALA LUMPUR: The ringgit is extremely undervalued - by 15% to 20% - and expected to make a turnaround in the second half of next year, Standard Chartered analysts said.

Standard Chartered group chief investment strategist/wealth management, Steve Brice, said the ringgit would probably be weaker in the next three months, by three to five per cent from where it was now.

Source: The Star

http://www.thestar.com.my/Business/Busi ... ?style=biz

[winston]

Malaysian ringgit under pressure

BY CECILIA KOK

The Malaysian currency remains under pressure due to concerns over the impact of persistently weak oil prices on the country’s economy, as well as the risk of a further devaluation of the yuan.

Malaysia in October had unveiled its Budget 2016 based on the assumption that Brent crude oil prices would average US$48 per barrel. The budget had estimated about 19% of the Government’s revenue next year to come from O&G-related activities.

Source: The Star

http://www.thestar.com.my/business/busi ... ?style=biz

[winston]

Challenges for the ringgit, will face number of issues in 2016

BY ZUNAIRA SAIEED

Source: The Star

http://www.thestar.com.my/business/busi ... ?style=biz

[winston]

Q: Will the ringgit weaken to 4.80 to the US dollar?

No. The ringgit has been pretty stable versus the US dollar ever since the Dec 17 announcement by the US Federal Reserve of a hike in the benchmark federal funds rate.

However, the market expects the ringgit to average 4.40 to the greenback with the consensus ranging between 3.90 and 5.00. A number of factors will affect the ringgit’s performance. Top on the list will be the direction of crude oil prices. Analysts have warned that further weakening of oil prices will impact the ringgit.

Secondly, the direction of the yuan.

Currency strategists say that countries in South-East Asia with close trade linkages with China will be see their currencies impacted by a weaker yuan. Thirdly, the Fed has signalled that there could be more rate hikes in the offing this year and it would dampen the ringgit sentiments.

Lastly, for those who are asking if the ringgit will ever go back to the 3.80 levels seen before August, the answer is also “no”. For that to happen, fundamentals will have to be very much stronger and investors will have to be more convinced that Malaysia’s growth story is sustainable and that reforms of the economy will continue to be pushed even though they are unpopular.

Source: The Star

[winston]

Malaysian Ringgit: A Dead Cat Bounce?

By Shuli Ren

Source: Barron's Asia

http://blogs.barrons.com/asiastocks/201 ... at-bounce/

[winston]

US dollar rally against ringgit may be over

BY K.M. LEE

Initial support for the greenback is seen at the 4.05 mark, followed closely by the 4.025 level.

To the upside, stiff resistance is envisaged at the 4.1397 level.

Source: The Star

http://www.thestar.com.my/business/busi ... y-be-over/

[winston]

Mobius says Malaysia currency is undervalued by 28 pct

The ringgit was Asia's worst performing currency last year when it lost 18.5 percent to the dollar.

"It is a 28 percent undervaluation, which is why we have been buying local stocks"

Mobius said emerging markets are at a "turning point", and listed Brazil, Vietnam and Malaysia among his favourite emerging market investment destinations.

Source: Reuters

http://www.reuters.com/article/malaysia ... SL3N16N2IH

[winston]

Limited upside for the ringgit

BY INTAN FARHANA ZAINUL

The economist said the recent strength in the ringgit was supported by higher crude oil prices and he believed that the support could be short lived.

“The strength in the ringgit may not be sustainable, we are looking at a 4.00-4.20 range against the US dollar”

Source: The Star

http://www.thestar.com.my/business/busi ... e-ringgit/