Malaysian currency sentiment to improve on better outlook

Source: Xinhua | 2019-05-18

Malaysia's decent economic growth and wider current account surplus in the first quarter, as well as measures to support market liquidity and accessibility could help strengthen Malaysian ringgit, an analysis said Friday.
Kenanga Research said in a report that it expects the Ringgit strength to restore due to the sharp upswing in Malaysia's current account, decent economic growth and Malaysian central bank's new measures.
The current dovish United States Federal Reserves and a relatively higher Brent crude oil price could further provide some support to the Ringgit, it added.
The research house expects the Ringgit to improve slightly to 4.10 against the U.S. dollars this year, from 4.13 last year. However, in the short term, it believed the Ringgit will remain volatile and may test the 4.20 level.
The Ringgit fell slightly to 4.1715 against the U.S. dollars as of 9 a.m. on Friday. According to Malaysian central bank, the Ringgit has appreciated by 1.4 percent against the U.S. dollar in the first quarter, driven mainly by non-resident portfolio inflows.
However, since April, the Ringgit has depreciated by 2.2 percent against the U.S. dollar as at May 15, in line with most regional currencies.
"The recent depreciation pressure reflected cautious investor sentiments in global financial markets amid the weakening global growth outlook as well as uncertainties surrounding geopolitical and global trade developments," said the central bank.
Malaysia's current account surplus widened to 16.4 billion ringgit (3.93 billion U.S. dollars) in the first quarter, the highest since first quarter of 2014.
The central bank on Thursday announced several pre-emptive measures to improve the country's market stability and stanch capital outflow, which includes improving the repo market marking activity, enhancing the delivery for Malaysia government securities futures settlements, expanding the dynamic hedging program to include trust banks and global custodians.
It also provides flexibility for investors to enter forward contracts to buy Ringgit, introducing standard documentation for foreign exchange transactions, and enhancing provision of Ringgit liquidity beyond local trading hours.