Malaysia in better position to weather financial mart volatility
Published on: Saturday, September 08, 2018
Kuala Lumpur: Malaysia's current account surplus puts the country in a better position to weather the volatility in the financial markets.In its economics view report on Friday, RHB Research Institute Sdn Bhd said despite the nation's deficit fiscal positions, it is enjoying a surplus in their current accounts and a resilient ringgit."Indeed, the ringgit is more resilient as compared to the three major incidents in the past that caused massive capital outflows and weakness in the currency.
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"The first incident was during the global financial crisis between April 2008 and March 2009, caused by the US subprime credit crisis, while the second incident was during the US Federal Reserve's taper tantrum between Jul 2014 and Aug 2015, and the third was in the August 2016-March 2017 period, when Donald Trump won US presidential election and expectations arose that he would introduce stimulus policies," it said.RHB Research said there was potential for the ringgit to overshoot its year-end target of 4.10 against the US dollar but it is unlikely to weaken too severely."This is due to Malaysia continuing to enjoy a surplus in its current account in the balance of payments.Stay up-to-date by following Daily Express’s Telegram channel.
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The research institute opined that while the foreign exchange control policy that required exporters to convert 75 per cent of proceeds into ringgit was relaxed somewhat, it would still create a natural flow of trade money demand for the currency to mitigate capital outflow and to provide support for the local note. – Bernama
