Know it here first! Capital flight underway in Malaysia and locals are now hoarding SGD which is readily available. Recent investigations into 1MDB laundering also revealed that the corrupted in Malaysia had repatriated tens of billions in ringgits (in exchange for other currencies) overseas to hide ill-gotten gains.
Bank Negara is expected to avoid or limit any rate-hike in 2017 before the next General Elections, which will not be helpful to ringgit's strength. In the first month of 2017, bankers saw the crash of offshore (non-delivered) ringgit-forwards volume, which reduced ringgit liquidity in FX market. A weaker ringgit is preferred by Najib to shore up local exporters' margins and attract new investments eg. Toyota.
In response to the new Pedra Branca challenge, insiders also expect Singapore to use the time-frame before ICJ judgement (appx 1-year) to retaliate against Ringgit in FX market. Singapore banks will begin to cease offering SIBOR-pegged ringgit loans to sg-based buyers of Malaysian properties.
Bank Negara is expected to avoid or limit any rate-hike in 2017 before the next General Elections, which will not be helpful to ringgit's strength. In the first month of 2017, bankers saw the crash of offshore (non-delivered) ringgit-forwards volume, which reduced ringgit liquidity in FX market. A weaker ringgit is preferred by Najib to shore up local exporters' margins and attract new investments eg. Toyota.
In response to the new Pedra Branca challenge, insiders also expect Singapore to use the time-frame before ICJ judgement (appx 1-year) to retaliate against Ringgit in FX market. Singapore banks will begin to cease offering SIBOR-pegged ringgit loans to sg-based buyers of Malaysian properties.
