Sunday, February 3, 2013

Another election fear: Currency?

Malaysian Ringgit has gone through a bad patch over the last 1 week. It seems that the General Election is having its effect on our currency as well? As below, usually Ringgit traded within a range against Thai Baht - most of the time trading around 1 MYR = 10.10 THB. Most recently, MYR has weakened to 9.58.

The usually stable MYR against Thai Baht faced a change where MYR dropped significantly over the last week
Usually, currency trading over the short term really reflect the sentiment rather than longer term fundamentals. Why has MYR dropped? Funds pull out? These are short term funds so to speak - have foreign funds been selling on our stock market as over the recent month, most markets have been performing with the exception of Malaysian market. Or could it be the currency traders have been shorting the Malaysian Ringgit?

The sharp drop in MYR against Euro. Pretty much the same against most other major currencies

7 comments:

Gark said...

Weakening currency usually means more outflow than inflow of currency. This is either by trade or investments. Trade has been normal with not much disruptions, although we have also seen slowdown of palm oil export.

From the recent market & govt bond weakness, the outflow implied is money moving out of Malaysia from the recent sell down. The sell down of bond and stocks, implied heighten risk during GE.

The currency will have steady outflow until the completion if GE.

Gark said...

Also another palm oil export country, Indonesia also suffer the same weakening of the currency.

As of 2013, china palm oil import fell almost 50%, similarly slowdown in India and Europe due to raised taxes. China is the worst, if RDBPO does not meet the strict specification of china government, the ship will be turned back.

felicity said...

Last one week MYR dropped against Rupiah as well...

Alan said...

as far as I know, the selling of short terms bonds by foreigner fund managers (together with sell off from equity)has exacerbated the downward of MYR.

Alan said...

as far as I know, the selling of short terms bonds by foreigner fund managers (together with sell off from equity)has exacerbated the downward of MYR.

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