SGD/MYR could break 3.0 by year- end: UOB
Published on: Wednesday, May 10, 2017
Kuala Lumpur: The cross rate between the Singapore dollar (SGD) versus the Malaysian ringgit (MYR) could possibly head lower and return to below the 3.0 level by year-end, says United Overseas Bank (UOB).Based on current trend, the cross would likely pass through the 3.0 psychological level as the US dollar per ringgit (USD/MYR) is projected to hover at around 4.30 by end-December while USD/SGD may hold at 1.46. "SGD is seen as a "safe haven" currency in the region, and when the risks were higher, a lot of funds came in to support the republic's currency.
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"The SGD/MYR cross is now seen as quite expensive and there could be a reversion. Based on the rates predicted for year-end, the cross could head lower," UOB (Malaysia) Bhd Economist Julia Goh told Bernama on the sidelines of a media briefing on, "How Global Events Will Impact Malaysia's 2017 Growth Trajectory" here Tuesday.The ringgit rose against the SGD to 3.0822/0855 as at 5pm Tuesday from Monday's 6pm rate of 3.0856/0886.For the past decade, the cross had been traded bias to the strength of SGD, with the ringgit weakening to as low as to 3.1726 (March 16, 2017). Its best performance was recorded at 2.2178 (May 25, 2007).
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The republic's central bank, the Monetary Authority of Singapore (MAS), has been using the exchange rate as its main monetary policy tool to strike a balance between inflation from overseas and economic growth.Goh said MAS would most likely take a neutral policy stand as the republic's core inflation was manageable, despite market expectations that the policy might be tightened.
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While external risks remain present in the form of uncertainty in the US President Donald Trump's policies and geopolitical risks, she said there were mitigating factors as Malaysia was part of a wider production base in the region which benefits from domestic derived growth. Goh said UOB projected Malaysia's gross domestic product (GDP) growth to expand to at least 4.5 per cent this year and to 4.7 per cent in 2018, compared to 4.2 per cent in 2016.She said Malaysia's macro outlook was on the mend as the fog slowly lifts with its rising tide in exports and gains in new orders, reinforcing the bank's view that the country's economy should be progressing. Stay up-to-date by following Daily Express’s Telegram channel.
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