Hedge ring­git above 4.20 against US dol­lar, ex­porters urged

The Sun (Malaysia) - - SUNBIZ -

PETALING JAYA: Malaysian ex­porters should con­sider hedg­ing the ring­git ag­gres­sively when the lo­cal note sur­passes 4.20 against the US dol­lar, says the RHB Bank­ing Group.

Its Chief Econ­o­mist Lim Chee Sing said ex­porters should sell the US dol­lar pro­ceeds for­ward as the lo­cal note might strengthen to 3.80 per US dol­lar in 2017.

“Be­sides other weak­en­ing fun­da­men­tal fac­tors, the ring­git is ac­tu­ally un­der­val­ued be­cause there is cur­rently a sig­nif­i­cant po­lit­i­cal and in­vest­ment risk pre­mium be­ing built into it.

“The fear of po­lit­i­cal in­sta­bil­ity is overblown. The po­lit­i­cal risk pre­mium ac­corded to the ring­git should nar­row over time.

“When the po­lit­i­cal land­scape be­comes clearer, the head­winds should dis­si­pate, the risk pre­mium would nar­row, and the ring­git will strengthen back to­wards the 3.80 level against the dol­lar, per­haps to­wards end2017,” he told a press con­fer­ence at the TaxMax 42nd Se­ries Sem­i­nar or­gan­ised by Deloitte Malaysia here yes­ter­day.

TaxMax is an an­nual sem­i­nar tar­geted at top-level man­age­ment teams, fi­nance pro­fes­sion­als and in­ter­ested in­di­vid­u­als who wish to lever­age tax plan­ning op­por­tu­ni­ties from Bud­get 2017.

Themed “Brave de­ci­sions, Brave Ac­tions”, the full-day sem­i­nar ex­panded on tips on how to take the lead, make de­ci­sions to the best of our abil­i­ties and em­bark on that ul­ti­mate step to over­come the cur­rent eco­nomic un­cer­tain­ties.

Lim, who is also RHB Re­search In­sti­tute Chair­man, said the US elec­tion would also have a sig­nif­i­cant im­pact on the US dol­lar and sub­se­quently on the ring­git.

“If Hil­lary Clin­ton gets elected, a con­tin­u­a­tion of (cur­rent Pres­i­dent) Barack Obama’s poli­cies can be ex­pected. It does re­move cer­tain un­cer­tain­ties and the green­back will con­tinue to trade side­ways in that sce­nario.

“If Don­ald Trump gets elected, be­ing very US-cen­tric, his un­cer­tain poli­cies would cre­ate a lot of con­cern for peo­ple out­side the US, but peo­ple will still go for the dol­lar, it be­ing a safe-haven cur­rency. The green­back would strengthen rather than weaken,” he added. – Ber­nama

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