Ringgit poised to sustain rally after best quarter in 50 years
By Matthew Burgess / Bloomberg

(Sept 23): The Malaysian ringgit is poised to extend its rally after what’s likely to be its best quarter since 1973 as the central bank will probably refrain from cutting interest rates.

The ringgit has risen more than 12% against the dollar so far this quarter, making it the best performing emerging-market currency. Narrowing rate differentials with the US, improving trade performance and attractive asset valuations may help the ringgit strengthen further, analysts said.

Robust economic growth and a potential pickup in consumer prices if the government proceeds to remove some fuel subsidies may keep Bank Negara Malaysia on hold into 2025 even as other central banks start to lower borrowing costs. Foreign investor flows and further conversion of foreign currency deposits will also support the ringgit.

“Malaysia’s current account surplus, neutral central bank stance and stable fundamentals may help with further gains in light of dollar weakness,” said Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking Corp. “This is particularly so if markets expect more rate cuts by the US, reducing yield differentials between the US and Malaysia.”

The ringgit has been on a tear since April after a rebound in exports and efforts by the central bank to encourage state-linked firms to repatriate overseas investment income. The rally picked up steam this quarter as investors bet on Southeast Asian winners amid the prospect of policy easing by the Federal Reserve.

Global funds have poured a cumulative US$2.5 billion (RM10.51 billion) into the nation’s bonds in July and August, and bought US$1.2 billion of local equities since end-June, according to data compiled by Bloomberg.

The ringgit would also benefit from a rotation into Asia after foreign investors were overweight on Latin American currencies over the past year, according to Chandresh Jain, a strategist at BNP Paribas. “This flow should continue for some time,” he said.

The local currency closed 0.1% higher at 4.2037 versus the dollar on Friday.

Market indicators suggest the current surge in the ringgit may be stretched, signalling a potential consolidation in the near term. Traders will be keeping a close eye on the country’s budget announcement next month for its progress on subsidy reforms and fiscal deficit.

On a longer term basis, “there is no doubt that the ringgit valuation is attractive and cheap, based on effective exchange rate”, said Wee Khoon Chong, a strategist at Bank of New York Mellon.

ok, so when toyota camry going to be rm70k here?

When we going to become high tech country to keep up with the high currency value?

Low tech manufacturing country + high currency = gg

The surplus is down compared to 2023 in Q2, just 3 billion compared to last year 8 billion++ for the same quarter. Let's see Q3.

1 usd myr 2.50

Baru cerita la woi

Kek
Writing like fairy tale

Meanwhile iPhone is cheaper in Singapore!

Fitch Rating macamana skrang??

bring back to value when he was a FM..you can have all malaysian vote..

Pancut awal

USD cheaper but price of goods remain, we still poor

Why the ringgit was world’s top performing currency last week, and what this means for Malaysia
Posted on September 23, 2024, Monday at 8:31 AM

KUALA LUMPUR (Sept 23): The ringgit climbed to a 30-month high of 4.1815 against the US dollar on Friday to end the week as the world’s top-performing currency as it rode on the US Federal Reserve’s unexpectedly large interest rate cut that sparked euphoria for markets around the world.

The Malaysian currency surged to its highest level against the greenback since March 2022 after the 50 basis points rate cut in the US that exceeded initial forecasts, continuing a rally that began in January this year.

For the year to date, the ringgit has regained over 11 per cent of its value against the US dollar.

What is pushing the ringgit up?

The most recent bump is mostly caused by the Federal Reserve policy rate cut but the ringgit has been strengthening against the dollar since January this year, which analysts have attributed to growing investors’ confidence in the Malaysian economy as foreign investments drive demand for the currency.

Fiscal reforms that included the diesel subsidy recalibration could have given assurance about the government’s commitment to narrow its deficit while major economic blueprints such as the Energy Transition Roadmap and a new Industrial Master Plan had bolstered inflows into local companies.

Global funds poured nearly half a billion ringgit in Malaysian stocks as of August this year, Bloomberg reported last month.

Some analysts have also attributed the currency’s strong performance to the stable political leadership, as Prime Minister Datuk Seri Anwar Ibrahim has managed to allay fears that his coalition government of political parties that included former rivals could disintegrate, keeping it solidly intact until today.

A stable government means investors need not worry about disruptions to policies and projects as they plan their investments.

Is the ringgit also doing better against other currencies?

Ringgit’s performance has been a surprise for analysts given it was among currencies that fared poorly in 2023. Still, Bank Negara Malaysia maintained that the ringgit’s rout last year did not reflect the real strength of the Malaysian economy, and it did predict that the currency would improve by this year.

The currency has performed well against a basket of major currencies, including the euro and Singapore dollar. On Friday, it gained versus the euro to 4.6878/6950 and edged up against the Singapore dollar to 3.2507/2559 from 3.2567/2632 at Thursday’s close.

The ringgit was at 3.4326 against the Singapore dollar in the same month last year. Across year, the Malaysian currency has clawed back over 5 per cent of its value against its Singaporean opposite.

It has also improved over 12 per cent against the Canadian dollar, nearly 9 per cent against the Japanese yen, and over five per cent against the Australian dollar, among others.

Who will benefit from the ringgit’s rally?

Mostly importers who trade heavily in US dollars such as the automobile industry, transport, consumer, media, healthcare segments and even food and beverage.

AmInvestment Bank Research said in an August 2 note that the stronger ringgit could lower the cost of dollar-priced imported content although it would take a few months before the positive effect will be felt since stocks are not priced on spot market rates.

The same note forecasted positive earnings for companies like Berjaya Food, Nestle and chocolate products maker Guan Chong Sdn Bhd, which rely on the dollar to buy raw ingredients. Whether this would translate to cheaper food products is unclear.

A strong ringgit would also relieve some pressure off companies with heavy dollar denominated debt. Malaysia Airports Holdings Bhd, MISC Bhd, Sime Darby Plantation Bhd and Axiata Group Bhd are among companies that had raised debt in US dollar and other foreign currencies.

The flipside is that the stronger ringgit will make Malaysian exporters less attractive to buyers. – Malay Mail

Source: https://www.theborneopost.com/2024/09/23/wh...s-for-malaysia/

will never happen. government enjoying high income from high car sales tax and yet it is still selling like a hotcake

the only thing that goes up and wont come down is the price of the goods.
that's why if didnt keep inflation in check since the rudimentary stage, it would be too late.

Rindu jaman

1 usd = RM2.50 Thanos era…

Tale as old as time… 😭

want to sell your x50 is it?

Fat hopes. The incoming new Camry is going to be more expensive.

You do know that 2.50 is actually going to be bad to our economy, right?

If go back to RM2.50, it's actually a bad thing as we will be a lot more expensive than all our neighbours

CCP scam EV will be cheaper!! 😎💪🏾