‘Fed move to af­fect ring­git rally’

New Straits Times - - Business - JAMEEL AHMAD

KUALA LUMPUR: The United States Fed­eral Re­serve’s (Fed) in­ter­est rate hike de­ci­sion will be the ma­jor eye-catcher for Malaysia as it may have a neg­a­tive im­pact on emerg­ing mar­ket sen­ti­ment.

But Cyprus-based ForexTime Ltd (FXTM) said the pos­i­tive news was that there had been a grad­ual de­cline in US eco­nomic data of late.

This would re­duce ex­pec­ta­tions of the Fed pulling the trig­ger on more rate in­creases and pro­vide sup­port for emerg­ing mar­kets, it added.

“Although the ring­git has now re­bounded some­what, I be­lieve it is un­der­val­ued when con­sid­er­ing the econ­omy is ex­pand­ing at around four per cent,” said its vice-pres­i­dent of cor­po­rate devel­op­ment and mar­ket re­search Jameel Ahmad.

The ring­git could gain fur­ther strength if the Fed were to hint that re­cent weak­nesses in the US eco­nomic data would give it pause in rais­ing rates another two times by year-end, he added. This will also be sup­port­ive of the bond mar­ket.

Jameel said FXTM had seen in the past that for­eign in­vestors were at­tracted to Malaysian bonds, mean­ing that an im­proved sen­ti­ment in the in­ter­na­tional bond mar­ket would likely lend sup­port to the ring­git.

Ac­cord­ing to a Bloomberg re­port yes­ter­day, the ring­git had clam­bered aboard the Asian cur­rency rally, ad­vanc­ing against the US dol­lar and spurring flows into eq­uity mar­kets.

Although the ring­git has now re­bounded... it is un­der­val­ued when con­sid­er­ing the econ­omy is ex­pand­ing at around four per cent.

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.