The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
The focus today will be on both the Ringgit against a much stronger US dollar and the plantation sector. The Malaysian Palm Oil Board will announce this week Oct inventory, output and export numbers, thus the spot light on the plantation sector.
Last Monday, the KLCI eked out a 0.41-point gain to settle at 1,686.11. Yesterday, the Malaysian stock market was closed for the Deepavali holiday.
However, overnight US dollar gains could put the ringgit in the spotlight today. The ringgit was last traded weaker at 4.3825 versus the US dollar.
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| The Ringgit on spot light against a stronger US dollar |
Reuters reported that the prospect of a US rate hike sent the dollar to a seven-month high. A strong dollar eats into the overseas sales at US companies.
In overnight US share trades, the Dow Jones Industrial Average rose 0.16% to 17,758.21 points. Nasdaq Composite fell 0.24% to 5,083.24.
With the plantation shares like Sime Darby Bhd, Kuala Lumpur Kepong Bhd, IOI Corp Bhd and PPB Group Bhd account for substantial weightage in the 30-stock FBM KLCI, it will be interesting to see how the data will impact the index as a whole.
CIMB Investment Bank Bhd said in a note Malaysia's Oct palm oil inventory could have climbed to a record 2.72 million tonnes from the preceding month as exports dropped at a faster pace than production.
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