Ring­git could weaken fur­ther, fo­cus on dol­lar

> How­ever, for­eign ex­change ex­pert says there is no cause for worry yet

The Sun (Malaysia) - - SUNBIZ - BY EE ANN NEE

KUALA LUMPUR: The ring­git could weaken fur­ther on the strength of the US dol­lar, which is ex­pected to con­tinue its mo­men­tum un­til Don­ald Trump is in­au­gu­rated in Jan­uary 2017.

ForexTime vice-pres­i­dent of cor­po­rate de­vel­op­ment and mar­ket re­search Jameel Ah­mad said the US dol­lar is go­ing to di­rect how the ring­git is go­ing to play and how global cur­ren­cies trade in the com­ing months.

“At the mo­ment the mar­ket is long dol­lar and this could last a cou­ple more months. Could the ring­git go lower? Yes, but to what lev­els is dif­fi­cult to sug­gest. The mile­stone low for the ring­git was around 4.55-4.60 so if we cross those lev­els, there can be more con­cern, but un­til then, I won’t fo­cus on 4.80 or 5, that is spec­u­la­tion,” he told a me­dia brief­ing here yes­ter­day.

Jameel said if the ring­git does weaken to these lev­els, so would other global cur­ren­cies, and the ring­git would still be con­sis­tent against the bas­ket of cur­ren­cies.

“Don’t be in­tim­i­dated by the re­cent ring­git move­ments. This is a global trend. Malaysia is not alone.”

Jameel said in the mid to longer term, how­ever, slower global growth con­tin­ues to pres­sure the price of oil, and slow­ing global trade, higher im­port prices and higher in­fla­tion does mean the Malaysian econ­omy will con­tinue to sit lower in terms of growth.

“I would not be heav­ily con­cerned if it (GDP) drops be­low 4%. What is im­por­tant is do­mes­tic spend­ing con­tin­ues and the lo­cal econ­omy must re­main sup­port­ive,” he added.

Jameel said while head­line growth is slow­ing, the Malaysian econ­omy is still per­form­ing at ro­bust lev­els. Growth rates in Malaysia are still seen as sig­nif­i­cantly stronger than those in the de­vel­oped world and could reach above 4% if the do­mes­tic econ­omy per­forms.

“The emerg­ing mar­kets have to ac­cept the new nor­mal, that growth, at least on head­line is in­deed slow­ing. There are go­ing to be chal­lenges from a stronger US dol­lar and other risks such as slow­ing trade, but the emerg­ing mar­kets are still record­ing stronger growth rates than the de­vel­oped world.”

The US dol­lar has moved to lev­els not seen in over 12 years and the dol­lar index, which tracks the dol­lar against a bas­ket of cur­ren­cies, is trad­ing above 100, which was pre­vi­ously seen as a psy­cho­log­i­cal top for US dol­lar.

Brasserie Ter­race Four Sea­sons, Ky­oto

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