Ringgit gains 'not likely to last'
THE Malaysian ringgit strengthened sharply against the Singdollar immediately after last weekend's election but analysts believe it will be short-lived.
One Singdollar could buy about RM2.459 before the election but that fell on Monday to RM2.4191 post-polls, on the back of a 1.6 per cent increase in the ringgit.
The Malaysian currency rose again on Wednesday, where one Singdollar bought RM2.4109, the lowest the Singapore currency has been against the ringgit in more than a year. There was a slight movement in the other direction yesterday to the point where the Singdollar could buy RM2.42.
The election results prompted a strong rally in Malaysian equity markets, the main short-term driver of the ringgit appreciation.
Mr Tan Teck Leng, foreign exchange analyst at UBS Wealth Management Research, said the ringgit is forecast to weaken against the Singapore currency over the next 12 months to the point where one Singdollar will buy RM2.46, 1.7 per cent more than what it could have bought yesterday.
Mr Sanjay Mathur, head of economic research for Asia Pacific (excluding Japan) at RBS, said: "The recent rally has left the ringgit in overvalued territory, a problem that can be ill-afforded in a period of weak exports."
OCBC foreign exchange strategist Emmanuel Ng expects the exchange rate to return to the region of one Singdollar buying RM2.45 in the coming months.
He said the ringgit's performance will be affected by factors such as the global economic recovery and appetite towards emerging market assets.
Mr Nizam Idris, Macquarie Bank's head strategist of fixed income and currencies, expects the exchange rate to return to the RM2.48 to RM2.50 range in the months ahead.
As economic fundamentals are unchanged, he said, further gains in the ringgit and asset prices will require significant economic reform - which the "weakened" BN government might not be willing or able to put in place.
"The increasingly empowered opposition is not likely to be compliant in Parliament. This is likely to make policymaking a nightmare for the government."
http://www.straitstimes.com/premium/money/story/ringgit-gains-not-likely-last-20130511
THE Malaysian ringgit strengthened sharply against the Singdollar immediately after last weekend's election but analysts believe it will be short-lived.
One Singdollar could buy about RM2.459 before the election but that fell on Monday to RM2.4191 post-polls, on the back of a 1.6 per cent increase in the ringgit.
The Malaysian currency rose again on Wednesday, where one Singdollar bought RM2.4109, the lowest the Singapore currency has been against the ringgit in more than a year. There was a slight movement in the other direction yesterday to the point where the Singdollar could buy RM2.42.
The election results prompted a strong rally in Malaysian equity markets, the main short-term driver of the ringgit appreciation.
Mr Tan Teck Leng, foreign exchange analyst at UBS Wealth Management Research, said the ringgit is forecast to weaken against the Singapore currency over the next 12 months to the point where one Singdollar will buy RM2.46, 1.7 per cent more than what it could have bought yesterday.
Mr Sanjay Mathur, head of economic research for Asia Pacific (excluding Japan) at RBS, said: "The recent rally has left the ringgit in overvalued territory, a problem that can be ill-afforded in a period of weak exports."
OCBC foreign exchange strategist Emmanuel Ng expects the exchange rate to return to the region of one Singdollar buying RM2.45 in the coming months.
He said the ringgit's performance will be affected by factors such as the global economic recovery and appetite towards emerging market assets.
Mr Nizam Idris, Macquarie Bank's head strategist of fixed income and currencies, expects the exchange rate to return to the RM2.48 to RM2.50 range in the months ahead.
As economic fundamentals are unchanged, he said, further gains in the ringgit and asset prices will require significant economic reform - which the "weakened" BN government might not be willing or able to put in place.
"The increasingly empowered opposition is not likely to be compliant in Parliament. This is likely to make policymaking a nightmare for the government."
http://www.straitstimes.com/premium/money/story/ringgit-gains-not-likely-last-20130511
