Ringgit to further strengthen against greenback
KUALA LUMPUR: The ringgit will further strengthen against the US dollar this year to a fair value of between 3.80 and 3.90 to reflect Malaysia’s strong economic fundamentals.
Affin Hwang Asset Management Bhd (Affin Hwang AM) managing director, Teng Chee Wai, said a gradual recovery of the domestic unit was healthy for the country to allow exporters to adjust to the new environment.
“The ringgit has been punished too much since 2015. The shift in policies in 2016 has helped, especially towards encouraging exporters to repatriate 75 per cent of their proceeds back in the ringgit,” he told a media briefing on the market outlook here yesterday.
On the government’s move to never re-peg the ringgit against US dollar, Teng said, it would provide assurance to the foreign investors
“That is healthy, It gives a clear sign and dispel rumours out there on ringgit peg. I think that is good for the currency. As for foreign investors, they like the ringgit to be traded freely and that assurance is important for foreign investors,” he said.
Prime Minister Datuk Seri Najib Tun Razak said the government would never again peg the ringgit against the US dollar.
Najib also recalled that investors and global markets had lost confidence in Malaysia following the ringgit’s peg to the US dollar in September 1998 during the Asian financial crisis. It was only abandoned in July 2005.
Affin Hwang AM said synchronised growth across emerging and development markets would be positive for risk assets, as a positive earnings revision cycle continued to underpin the markets.
“We expect 2018 to be a frontloaded market, with a risk-on script continuing into the first half of the year and investors riding on the momentum to extract as much returns as possible in this period,”said Teng.
He said that positive sentiment in the markets and the recovery in the crude oil prices would help fuel the momentum and cheer on the rally.
“The markets remain in a sweet-spot position with positive growth and benign inflation which kept policy tightening at bay and created the right conditions for risk-assets to perform well,” said Teng.
However, volatility could pick up in the second half of the year as markets adjusted to a reversal of rate-cut cycle with global central banks expected to gradually lift interest rates and embark on their balance sheet unwinding, he said.
Meanwhile, Affin Hwang AM said, it was on track to achieve its RM50 billion assets under administration (AUA) this year and would continue to expand its investment offerings including alternative assets-classes such as private equity and real estate.
Charting one of the strongest growth trajectories in the company’s history, its AUA grew by over RM11 billion in 2017 to reach RM47.3 billion as at December 2017. — Bernama