The Malaysian Ringgit Retreats against the Dollar

on Sep 18, 2012

The Malaysian ringgit eased against the US dollar today as an increase in Spanish bond yields pulled investors’ appetite away from emerging currencies. In the late afternoon, the MYR/USD was trading at 3.0600/0620, a tad lower compared to Friday’s 3.0400/0440.

The ringgit performed weakly against other major currencies as well:
• weakened against the British pound to 4.9685/9727 from 4.9218/9298
• declined against the Singapore dollar to 2.4947/4984 from last Friday’s 2.4898/4937
• depreciated against the euro to 4.0028/0057 from 3.9626/9688 yesterday
Most emerging currencies ended their recent rallies and Interbank speculators reduced their bullish positions. According to analysts, the downward slide in the emerging Asian currencies was simply a short-term technical correction and high yields are still to be expected.

Asian shares tumbled on renewed concerns of the slowing Chinese economy. On Thursday 20 September, investors anticipate the manufacturing survey – HSBC’s flash purchasing managers’ index (PMI) which will hopefully shed some light on China’s recent performance.
Emerging Asian currencies escalated this month on a variety of positive news including the ECB’s bond-buying program, the Fed’s QE3 and the German court ruling. That is why, according to Frances Cheung, who is a senior strategist at Credit Agricole CIB, there will be a new round of support for risk assets.
Other analysts share a more pessimistic outlook, opining that the QE3’s induced optimism will fade and the inert global economy will take another bite at the Asian currencies.


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