SINGAPORE, Jan 28, 2016:
Most emerging Asian currencies slid today after the US Federal Reserve suggested there were risks from a slowing global economy but left the door open to an interest rate hike in March.
The ringgit, however, hit its strongest in nearly eight weeks, as the country kept its fiscal deficit target, defying expectations of a bigger shortfall. The currency also touched a near four-month peak against the Singapore dollar.
The ringgit rose as much as 1.2% to 4.2070 per US dollar, its strongest since Dec 7.
Malaysia maintained its 2016 fiscal deficit target at 3.1% of gross domestic product (GDP) and announced a series of restructuring steps expected to save the government RM9 billion.
Some economists had forecast that the deficit target would be raised to 3.3% of GDP.
Against the neighbouring Singapore dollar, the Malaysian currency touched 2.9424, its highest since Oct 9.
Investors have been recently buying the ringgit against the Singapore dollar with risks seen increasing that the city-state’s central bank may ease monetary policy to support economic growth and inflation.
“We see downside pressure to SGD/MYR,” said Christopher Wong, senior FX analyst for Maybank in Singapore, referring to the Singapore dollar/ringgit.
“We expect continued SGD weakness amid sluggish external demand and ongoing domestic restructuring efforts to raise productivity.
By contrast, views on MYR are positive due to relative stability in oil prices and resilient domestic demand. These are supporting sentiment.”
Wong said the ringgit may strengthen to 2.9229 per Singapore dollar, a 200-day moving average.
Source from The Rakyat Post