RINGGIT SELLOFF TOO EXTREME – EXPERT DOES NOT EXPECT BANK NEGARA TO CUT KEY INTEREST RATE AGAIN THIS YEAR

KUALA LUMPUR – Recent weakness in Ringgit not supported by fundamentals and currency likely to retrace, especially when it becomes clear that Bank Negara Malaysia will not be cutting rates again this year, Enrique Diaz-Alvarez, Chief Risk Officer at Ebury Partners, says in e-mail interview.

 Ringgit’s decline was spurred by Malaysia’s surprise interest-rate cut in July which fuelled speculation about further easing at a time when bets for Fed tightening have risen.

Ebury, the most accurate forecaster of emerging Asian forex in Bloomberg’s 3Q rankings, sees little chance that Bank Negara will ease again in Nov. unless MYR strengthens significantly as industrial output growth has held up well.

“The ringgit is well-positioned to appreciate against other Asian forex as it’s the second-cheapest currency in the region in REER terms and has the support of Malaysia’s sizeable current account surplus,” it said.

Ringgit up 0.1% to 4.1718 per US$ as of 3.52pm in Kuala Lumpur; it’s Asia’s worst performer in past three months with a 2.5% decline.

– Bloomberg
.