The Ringgit remains insulated

Meanwhile, Oanda Corp head of trading for Asia Pacific Stephen Innes said while local trade deficit currencies have been in speculators’ cross-hairs, the ringgit has been relatively insulated on strong terms or trade due to oil exports.

“Brent trading at almost US$80 (RM331.24) per barrel is music to the local government’s ears.

“I think when we look at the ringgit in the context of regional peers, it has survived a lot of turmoil this year from the strong US dollar narrative, higher US interest rates and (the US-China) trade war,” he said, adding that the ringgit has held up quite well even after the 14th General Election.

Although a weaker currency will make servicing external debt more expensive and add weight on budget deficits, higher oil prices are expected to serve as a balance to federal accounts.

“A weaker ringgit is less desirable from an import perspective, but it benefits exporters to a degree. However, for the local capital market to thrive, a stronger currency is much more favourable as it creates a reliable and robust bond market,” Innes said.

He expects the ringgit to appreciate to about RM4-RM4.05 by yearend, should the souring relationship between the US and China improve.

The Malaysian Reserve

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes