Forex

Malaysian Ringgit to Rally to Eight-Month High, Top Banker Says

Published

7 years ago

June 8, 2017

Malaysian Ringgit to Rally to Eight-Month High, Top Banker Says

The ringgit may advance 4 percent as the latest measures by Bank Negara Malaysia reduce the risks of holding the currency and the economy improves, a member of the central bank’s financial markets committee said.

The currency could reach 4.1 to the dollar in the second half, said Lee Kok Kwan, who is also a director at lender CIMB Group Holdings Bhd. The fair value of the ringgit should be between 3.8 and 4.0, when benchmarked against regional and commodity currencies, said Lee, who accurately predicted in January that the currency will rebound from a 19-year low.

“The macro fundamentals have improved quite a lot, such as GDP and exports,” Lee, who is part of the committee tasked to develop strategies for the nation’s bond and currency markets, said in an interview on Wednesday. “Equally as important, the speculative offshore holdings of short-dated ringgit instruments have declined markedly, which eliminates a major source of downside risk to the currency going forward.”

Lee joins a chorus of voices seeking to boost sentiment on Malaysian assets as the central bank relaxes currency hedging rules, after a clampdown on the trading of non-deliverable forwards last November sent investors fleeing. He is more bullish than the consensus analyst estimate, which sees the ringgit weakening to 4.35 against the dollar by the end of the year.

The currency last touched 4.1 in October, and was at 4.264 at 11:00 a.m. local time Thursday. Foreign holdings of debt rose for a second month in May, while the currency has advanced 5 percent this year as confidence improves.

A 45% increase in sales of ringgit corporate bonds this year, and the tightening of Malaysia’s credit-default swaps to less than 100 basis points suggest that the risk profile for the currency has dropped, Lee said.

Bank Negara’s clampdown on NDFs had reduced up to 50 billion ringgit ($11.7 billion) of overseas holdings of short-dated interest-bearing assets, Lee said. A requirement in December for exporters to hold only as much as 25 percent of proceeds in foreign currencies is also helping to sustain bids for the ringgit, Lee added.

To revive confidence, the central bank said in April it will let fund managers handle all of their foreign exchange exposure, up from a limit of as much as 25 percent of invested assets. It will also let domestic investors short-sell government bonds to boost liquidity.

Lee’s view echoes others including Neuberger Berman Group LLC, which said in April that the ringgit may be among the region’s better performers in the coming months. Strategists at Morgan Stanley wrote in a note this month that the currency is among those favored.

What’s boosting their case is Malaysia’s improving economy. Gross domestic product grew 5.6 percent in the first quarter, the fastest pace in two years, while exportsexpanded 20.6 percent from a year earlier in April.

Lee also made the following points in the interview:

Full liberalization of currency hedging in Malaysia negates the need for fund managers and corporates to go offshore to cover ringgit exposure
There’s more than 1 trillion ringgit in investments abroad, which are mostly unhedged, and the outsized foreign-exchange gains could disappear as the currency strengthens
Risk factors for the ringgit would include a major disruption in North Korea or in the Middle East. Expectations for U.S. interest rate increases have been priced in while commodity prices could fall further and pose a risk to Malaysia
Doesn’t see much upside for local bonds as “the ringgit yield curve is almost as steep as the U.S. yield curve, so it’s all priced in”

Up Next

Euro Is Nothing But a Flow Show and Analysts Are Getting Worried

Don't Miss

Yen Strengthens as BOJ Ponders Communications on Stimulus Exit

Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Comments

Forex

Yen Hits 34-Year Low Against Dollar Despite Bank of Japan’s Inaction

Published

2 days ago

April 26, 2024

Samed Olukoya

The Japanese yen plummeted to a 34-year low against the US dollar, sending shockwaves through global financial markets.

Despite mounting pressure and speculation, the Bank of Japan (BOJ) chose to maintain its key interest rate.

The yen’s relentless slide, extending to 0.7% to 156.66 against the dollar, underscores deep concerns about Japan’s economic stability and the efficacy of its monetary policies.

BOJ Governor Kazuo Ueda’s remarks at a post-meeting news conference did little to assuage fears as he acknowledged the impact of foreign exchange dynamics on inflation but downplayed the yen’s influence on underlying prices.

Investors, already on edge due to the yen’s dismal performance this year, are now bracing for further volatility amid speculation of imminent intervention by Japanese authorities.

The absence of decisive action from the BOJ has heightened uncertainty, with concerns looming over the potential repercussions of a prolonged yen depreciation.

The implications of the yen’s decline extend far beyond Japan’s borders, reverberating across global markets. The currency’s status as the worst-performing among major currencies in the Group of Ten (G-10) underscores its significance in the international financial landscape.

Policymakers have issued repeated warnings against excessive depreciation, signaling a commitment to intervene if necessary to safeguard economic stability.

Finance Minister Shunichi Suzuki reiterated the government’s readiness to respond to foreign exchange fluctuations, emphasizing the need for vigilance in the face of market volatility.

However, the lack of concrete action from Japanese authorities has left investors grappling with uncertainty, unsure of the yen’s trajectory in the days to come.

Market analysts warn of the potential for further downside risk, particularly in light of upcoming economic data releases and the prospect of thin trading volumes due to public holidays in Japan.

The absence of coordinated intervention efforts and a clear policy stance only exacerbates concerns, fueling speculation about the yen’s future trajectory.

The yen’s current predicament evokes memories of past episodes of currency turmoil, prompting comparisons to Japan’s intervention in 2022 when the currency experienced a similar downward spiral.

The prospect of history repeating itself looms large, as market participants weigh the possibility of intervention against the backdrop of an increasingly volatile global economy.

As Japan grapples with the yen’s precipitous decline, the stakes have never been higher for policymakers tasked with restoring stability to the currency markets. With the world watching closely, the fate of the yen hangs in the balance, poised between intervention and inertia in the face of unprecedented challenges.

Naira

Dollar to Naira Black Market Today, April 25th, 2024

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

3 days ago

April 25, 2024

Samed Olukoya

Naira to Dollar Exchange- Investors King Rate - Investors King

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,260 and sell it at N1,250 on Wednesday, April 24th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.

Black Market Dollar to Naira Exchange Rate

Buying Rate: N1,300
Selling Rate: N1,290

Naira

Dollar to Naira Black Market Today, April 24th, 2024

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

4 days ago

April 24, 2024

Samed Olukoya

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,250 and sell it at N1,240 on Tuesday, April 23rd, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined slightly when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.