KUALA LUMPUR, Nov 19 (Bernama) -- Bursa Malaysia gave up earlier gains to end mixed today, amid a higher regional market showing, as property, construction, and healthcare counters attracted buying interests, while plantation, banking, and telecommunication stocks saw some profit-taking, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 1.70 points to close at 1,602.34 from yesterday’s close of 1,604.04. The benchmark index, which opened 0.86 of-a-point lower at 1,603.18, moved between 1,601.02 and 1,608.88 during the trading session. However, the broader market was mixed to higher, with gainers leading decliners by 565 to 438 while 502 counters remained unchanged, 961 untraded, and 14 suspended. Turnover narrowed to 2.83 billion units valued at RM2.08 billion versus 2.96 billion units valued at RM2.23 billion yesterday. Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said the benchmark index remained range-bound and it required a dec
The Malaysian Institute of Economic Research (MIER) has stated that the ringgit is currently undervalued but is fairly valued between 3.90 and 4.20 against the US dollar. This assessment comes after a period of underperformance by the ringgit, which was trading at 4.34 to the dollar at the time of the report.
Key Insights:
Fair Value Indicators: MIER’s valuation is supported by indicators such as the Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER), both of which suggest that the ringgit's fair value lies within the 3.90-4.20 range against the US dollar.
Potential Impact of US Rate Cuts: The report highlights that a cumulative 100 basis points rate cut in the US federal funds rate in 2024 could narrow the interest rate differential between the US and Malaysia to 125-150 basis points. This could be favorable for the ringgit as investors might diversify their holdings in search of better returns.
Supportive Domestic Factors: Domestic economic factors such as fiscal reforms aimed at reducing the budget deficit, strong GDP growth expected to reach or exceed 5% in 2024, and robust foreign direct investment are seen as supportive of the ringgit’s value. Additionally, the repatriation of funds by government-linked companies and a sustained current account surplus driven by exports in electronics, tourism, and services further bolster the currency's outlook.
Foreign Investment Inflows: Foreign investments into Malaysia’s equity and bond markets have shown positive trends. After an outflow of RM823.6 million earlier in the year, the equities market saw an inflow of RM1.3 billion in July. In the bond market, foreign inflows reached RM874.6 million in the first half of 2024.
Exchange Rate Forecast: MIER expects the ringgit to appreciate to between 4.20 and 4.25 by the end of 2024, improving from 4.59 at the end of 2023. However, the continued strength of the US dollar may keep the ringgit’s average exchange rate around 4.60-4.64 against the dollar, slightly higher than the 4.56 average in 2023.
Conclusion: While the ringgit is currently undervalued, various economic factors, both domestic and international, suggest that it is fairly valued between 3.90 and 4.20 against the US dollar. With expected improvements in the economic outlook and foreign investment inflows, the ringgit may see gradual appreciation by the end of the year, although the strong US dollar could temper these gains.
Comments
Post a Comment