11Apr
sgx2

Malaysia’s ringgit has done a stunning about-face this year

SINGAPORE :

  • The ringgit strengthened 10 percent against the U.S. dollar in January-March, its largest quarterly gain since 1973, Thomson Reuters data shows.
  • Still, few expect the ringgit to regain all the ground lost last year, as inflows may have peaked as Malaysian risk assets are starting to look pricey to investors and analysts.
  • Malaysia’s ringgit has done a stunning about-face this year, with surging capital inflows turning it into Asia’s best-performing currency from the region’s worst in 2015.
  • In 2015, the ringgit had its worst year since 1997, shedding 18.5 percent on the back on plunging oil prices, anticipated higher U.S. interest rates and a financial scandal at state-owned 1Malaysia Development Berhad (1MDB).
  • Driving the currency’s U-turn is the return of foreign investors, who have poured into Malaysian stocks and bonds on better crude oil prices, a surprisingly resilient economy and easier monetary policies from major central banks.
  • “The market is saying that this recovery in oil prices will be pretty positive for the Malaysian economy,” said Kelvin Tay, chief investment officer for southern Asia Pacific at UBS Wealth Management in Singapore.
  • In February, exports rose faster than expected. Sales of electrical and electronic products, the biggest item, increased 8.9 percent from a year earlier.

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