Ringgit falls to new low against S’pore, US dollars
SINGAPORE — The Chinese yuan may have halted its three-day slide, but the Malaysian ringgit is still continuing its freefall, hitting fresh lows against the Singapore and US dollars yesterday, on concerns the nation is running out of ammunition to defend its currency amid a political scandal. The ringgit is Asia’s worst-performing currency this year, as it fell about 16.6 per cent against the greenback. It slid to a new 17-year low of 4.1270 to the US dollar yesterday, before closing at 4.0805. The ringgit has dropped 9.8 per cent this year against the Singapore dollar. It weakened to an all-time low of 2.9346 to the Singapore dollar yesterday, before recovering some ground at 2.9078.
“SGD/MYR has exceeded our original expectation to trade between 2.75 and 2.87 for the rest of the year. This was the view before China’s unanticipated devaluation this week,”Mr Philip Wee, senior currency economist at DBS, told TODAY. “We have revised our currency forecasts due to the heightened volatility after the CNY devaluation … The new price channel we are tracking does not show SGD/MYR hitting 3.00 by end-2015. But the high of this channel is around 2.96.” The ringgit led a retreat in Asia this week as Governor Zeti Akhtar Aziz said on Thursday the central bank will need to rebuild foreign-exchange reserves that have fallen below US$100 billion (S$140 billion) for the first time since 2010. China’s central bank stunned markets on Tuesday by devaluing the yuan by nearly 2 per cent, and the currency fell more the following two days. But it held steady yesterday against the dollar after suspected intervention by the central bank, who said on Thursday there was no reason for it to fall further. China’s surprise devaluation put more downward pressure on the ringgit and shares, which were reeling from falling crude and a scandal involving Prime Minister Najib Razak. The impact of the ringgit’s drop is manageable and the economy will remain on a steady growth path, bank Ms Zeti said on Thursday. “Malaysia is probably a relatively easier target for markets, and this is why we’re seeing continued outflows and pressure on the currency,” said Mr Mitul Kotecha, head of Asia Pacific foreign-exchange strategy at Barclays in Singapore. “I don’t think this ... is justified at these sorts of levels.”
“The ringgit remains vulnerable,” said Mr Khoon Goh, a Singapore-based strategist at Australia & New Zealand (ANZ) Banking Group. “Governor Zeti said the central bank will set about rebuilding reserves, which means there will be a limit to any rally.” Agencies
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Post time 14-8-2015 09:54 AM
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