Bank Negara's liberalisation actions stabilises the ringgit - UOB

UOB’s Global Economic & Markets Research team has issued their periodical report – the ‘Third Quarter UOB House View’ today.

In the report, UOB noted that the ringgit have strengthened in recent months, attributing on the US dollar weakness, with an upswing on sentiment for the ringgit.

UOB argues that Bank Negara Malaysia’s (BNM) actions on liberalisation of the bond and forex hedging requirements that took effect in May this year made the ringgit sentiment stronger.

Also presented in the report is that improving macro parameters boosted sentiment on Malaysia’s currency even further.

UOB however cautioned that the trend going forward could turn volatile amid speculations that the general election is near and points out that ‘sizeable’ government bonds are maturing between August and November, which could make things problematic for Malaysia, if more volatile crude oil prices persists.

The ‘House View’ report on Malaysia is a periodic report issued by the Singapore-based bank given to certain quarters of the public to show the ‘lay of the land’ in the eyes of the Singapore lender. Issued by their Asset Management team of their Private Banking arm, it gives useful information on some of the key highlights that they believe is important for their investors.

Other than Malaysia, the report highlights key movements on other ASEAN and key global markets as well, including reports on China, Indonesia, Australia, the United Kingdom and more.

It also targets interest rates of banks, currency expectations, and other useful investment banking information.

Also in the report, UOB stated that they are generally ‘cautiously optimistic’ about the global outlook in the second half of this year, citing a synchronised global recovery. UOB thinks that “the positive growth outlook is tinged with a shade of grey as export expansion cycle may have peaked’.

“There are many known risk events in the third quarter, but none is expected to blow up and drag the rest of the world down with it” the report said.