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Nov 2016 28

There’s plenty that can go wrong at Opec’s big meeting on Wednesday

BY JULIAN LEELONDON: The Organisation of the Petroleum Exporting Countries (Opec) oil ministers will meet on Wednesday to agree on their first output cut since the 2008 financial crisis. The deal will be “a total...

BY JULIAN LEE

LONDON: The Organisation of the Petroleum Exporting Countries (Opec) oil ministers will meet on Wednesday to agree on their first output cut since the 2008 financial crisis. The deal will be “a total success,” according to Venezuela’s president. His oil minister had already called it “a historic agreement, one that’s never been seen before.”

Stirring stuff to be sure, but can they deliver? The balance of expectations favours an agreement. Opec has invested too much credibility to fail. That may be so, but a similar investment didn’t save the deal to freeze output that collapsed at the last minute earlier this year.

The positions of Iran and Iraq will probably be critical. Iraq’s prime minister has said the country will cut output, but the argument over what level of production it would accept as a starting point for any reduction seems to rumble on.

Iran is said to have been offered the option of freezing output at the current official output level of 3.92 million barrels a day. But, as I pointed out last week, that would force it to tacitly endorse the two million barrel a day increase in Saudi output since 2011, something it could find extremely difficult. Opec officials meeting in Vienna last week failed to resolve either issue, deciding to leave them for ministers to wrestle with on Wednesday.

 

Then there’s the question of support from non-Opec producers.

Opec does have history of coordinating cuts with non-member countries. In November 2001 the group agreed to reduce supply by 1.5 million barrels a day, but only if non-Opec producers contributed another 500,000 barrels of cuts. They got enough commitments to go ahead, although there was much discussion afterwards about how much of the promised reduction actually happened.

This time around there’s also ample evidence that Opec is looking for external support, although this has yet to go as far as specifically linking Opec cuts to non-Opec action. Russia’s energy minister says Opec has asked for 500,000 barrels a day of non-Opec cuts, his Azerbaijani counterpart put the figure at 880,000 barrels.

If Saudi Arabia is really determined not to resume its role as the world’s swing producer – and there’s nothing to suggest otherwise – this may be an attractive mechanism to share the burden. But it carries risks.

Russia has said it would only consider its own contribution after Opec had presented it with an internal agreement to cut supply. Moscow prefers freezing output at its current post-Soviet record level of about 11.2 million barrels a day, claiming this represents a cut of 200,000 to 300,000 barrels a day from planned output in 2017. In the end, it'll come down to one question: how much does Saudi Arabia want, or need, a deal? If it's willing to abandon the policy to protect its market share that it set in motion two years ago, a deal can be done with relative ease. If not, the situation is far less certain. – Bloomberg

Source: The Star

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Nov 2016 25

Msian banks reminded to keep an eye on speculative Ringgit trading

BY RUPA DAMODARAN KUALA LUMPUR: Banks in Malaysia have been reminded that they play a key role in curbing speculative trading of the Ringgit internationally during this current period of “undue volatility.”The...

BY RUPA DAMODARAN 

KUALA LUMPUR: Banks in Malaysia have been reminded that they play a key role in curbing speculative trading of the Ringgit internationally during this current period of “undue volatility.”

The recent move by the central bank to clamp down on Ringgit non-deliverable forward (NDF) was made in order to protect real sectors in the economy and genuine investors in the financial system here.

The reminder delivered by the Financial Markets Committee (FMC) today was aimed at the 58 onshore banks in the country.

"Ringgit prices and its volatility have been affected by activities and prices in the offshore NDF market, which is not necessarily reflective of economic fundamentals and underlying trade and investment activities," said FMC.

The FMC comprises participants and representatives from the central bank, financial institutions, corporations, financial services providers and other stakeholders.

It said liquidity continues to be available, supporting the smooth and orderly functioning of the Malaysian financial market in intermediating in the needs of market participants.

During the week of Nov 14 to 18, RM39.7 billion and US$49.1 billion were transacted in the Malaysian bond and FX markets respectively.

This compares to the RM17.8 billion and US$31.6 billion transacted in the preceding week.

Non-resident participants, such as corporations, global asset and fund managers, as well as clearing and custodian banks continue to transact in the Malaysian financial markets.

The transactions were intermediated by onshore banks, which include 19 foreign banks that are subsidiaries of regional and large global banks.

"A number of foreign banks have begun discussing with BNM on their financial market transaction needs to facilitate a smooth transition during this period, without causing market disruption," said FMC.

The committee also welcomed governor Datuk Muhammad Ibrahim's initiatives and strategies to further deepen liquidity on the onshore market, while providing more flexibility for market participants to manage foreign exchange risks with onshore banks.

"We look forward to carrying through these initiatives and engaging with the industry to support an efficient and effective implementation," FMC added.

 

 

Source: New Straits Times

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Nov 2016 24

Bank Negara keeps OPR unchanged at 3%

KUALA LUMPUR: Bank Negara has maintained the overnight policy rate (OPR) at 3% at its Monetary Policy Committee (MPC) meeting held Wednesday, in line with market expectations.Bank Negara had lowered its benchmark rate by 25...

KUALA LUMPUR: Bank Negara has maintained the overnight policy rate (OPR) at 3% at its Monetary Policy Committee (MPC) meeting held Wednesday, in line with market expectations.

Bank Negara had lowered its benchmark rate by 25 basis points to 3% in July.

“At the current level of the OPR, the degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path amid stable inflation, supported by continued healthy financial intermediation in the economy. 

“The risk of destabilising financial imbalances has been contained. However, the MPC will be monitoring these risks to ensure the sustainability of the overall growth prospects,” Bank Negara said in the statement. 

The central bank said the domestic economy continued to expand in the third quarter of the year, driven mainly by private sector activity with some support from net exports. 

“Going forward, private sector activity will remain the key driver of growth. Private consumption is expected to be sustained by continued wage and employment growth, with additional support from Government measures to increase disposable income. 

“Investment activity, although moderating, will be supported by on-going infrastructure investments and capital expenditure in the manufacturing and services sectors,” it said.

On the external front, exports are expected to expand but will be constrained by soft demand from Malaysia’s key trading partners. 

Overall, the domestic economy remains on track to expand as projected in 2016 and 2017.

Headline inflation for 2016 is expected to be at the lower end of the projected range of 2.0% – 2.5%. Inflation is expected to remain relatively stable in 2017 given the environment of low global energy and commodity prices, and generally subdued global inflation.

Bank Negara noted that the ringgit, along with most emerging market currencies, had experienced sharp adjustments and significant volatility due to continuing uncertainties in global economic and policy environment, and geopolitical developments.  These factors could result in periods of volatility in the regional financial and foreign exchange markets. 

“In this regard, Bank Negara will continue to provide liquidity to ensure the orderly functioning of the domestic foreign exchange market. 

“The capital market remains accessible, deep and liquid. Banking system liquidity is ample. Financial institutions continue to operate with strong capital and liquidity buffers and the growth of financing to the private sector is consistent with the pace of economic activity,” it added.

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Nov 2016 23

TPP can still proceed without US, amend requirement clause: Miti Minister (New Straits Times)

BY OOI TEE CHING KUALA LUMPUR: Malaysia and 10 other member nations in Trans-Pacific Partnership (TPP) can carry on without the US, if a requirement clause is amended, said Second Minister of International Trade and...

BY OOI TEE CHING
 

KUALA LUMPUR: Malaysia and 10 other member nations in Trans-Pacific Partnership (TPP) can carry on without the US, if a requirement clause is amended, said Second Minister of International Trade and Industry Datuk Seri Ong Ka Chuan. "I think US President-elect Donald Trump's intention to withdraw from the TPP is a temporary vision. Perhaps later, he may realise the tangible benefits of TPP and change his mind accordingly," Ong said. Ong was responding to a question of Trump's announcement to quit the Trans-Pacific Partnership (TPP) trade deal on his first day in the White House. US President-elect Donald Trump had consistently campaigned on a protectionist and anti-trade platform. The 12-member TPP consist of the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. This landmark deal aims to cut trade barriers in some of Asia's fastest-growing economies and boost ties with US allies in the region. Signed by its initiator US, and 11 other participating members in February 2016, the TPP covers 40 per cent of the world's economy. It has not yet been ratified. It must be highlighted TPP can only come into force if it is approved by six countries that account for at least 85 per cent of the group’s economic output. In effect, the deal will be dead without ratification by the US, whose US$18 trillion economy make up 60 per cent of the TPP economic worth. Asked on the way forward for Malaysia, Ong highlighted a possible option is to amend a requirement clause in TPP. "It is up to the determination of 11 remaining member countries to amend the clause requiring six nations which make up 85 per cent collective approval for TPP to carry on without the US," Ong said. He was speaking to reporters here today after officiating at the "Sustainable Consolidation in Malaysia's Iron and Steel industry" seminar organised by Malaysia Steel Institute, an agency under the purview of International Trade and Industry Ministry. Ong’s view echoes that of Singapore Prime Minister Lee Hsien Loong at the recent Asia-Pacific Economic Cooperation (APEC) talks held in Peru. Singapore's Lee said the TPP, without the US, would mean a completely new agreement. This leaves the 11 remaining countries to renegotiate at least just one clause of the TPP to allow the pact to be salvaged, without America's participation. Indeed, new negotiations of the TPP would have to take into consideration new global developments. "That means, the 12 minus one will have to get together and sign an agreement with a different coming-into-effect clause. And that is fresh negotiation…and that is not so easy to do,” Lee reportedly said. “The TPP, as an agreement, has got rules as to when it comes into effect - what, how, when it does happen,” he added.
 


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Nov 2016 22

Ringgit rebounds in early trade on higher oil prices (New Straits Times)

KUALA LUMPUR: The ringgit rebounded to open slightly higher against the US dollar this morning as the three-week high oil prices helped boost investors’ appetite, dealers said. At 9.04 am, the local unit was traded at 4.4100...

KUALA LUMPUR: The ringgit rebounded to open slightly higher against the US dollar this morning as the three-week high oil prices helped boost investors’ appetite, dealers said. At 9.04 am, the local unit was traded at 4.4100/4180 against the greenback from 4.4170/4230 on Monday. Growing hopes for a cut in oil production among major producers, especially the Organisation of the Petroleum Exporting Countries (OPEC) which collectively produce more than a third of the world’s oil, have sent Brent crude oil prices to nearly US$49 a barrel. A dealer said the positive overnight closing of Wall Street would also influence demand later. Nevertheless, he said, the cautious stance on the back of a possible faster-than-expected US interest rate increase would weigh on sentiment. Against other major currencies, the local unit traded mostly easier. It fell against the Singapore dollar to 3.1028/1095 from 3.0994/0041 on Monday, weakened against the yen to 3.9906/9982 from 3.9857/9930 and narrowed versus the British pound to 5.5138/5260 from 5.4479/4558. However, the ringgit rose vis-a-vis the euro to 4.6922/7021 from 4.6957/6837 yesterday. -- Bernama



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Nov 2016 21

Bank Negara eases hedging rules (The Star)

The governor said that to further deepen the local hedging market, Bank Negara was working with the Securities Commission and Bursa Malaysia to introduce a US dollar and yuan-ringgit futures onshore exchange.PETALING JAYA:...

The governor said that to further deepen the local hedging market, Bank Negara was working with the Securities Commission and Bursa Malaysia to introduce a US dollar and yuan-ringgit futures onshore exchange.

The governor said that to further deepen the local hedging market, Bank Negara was working with the Securities Commission and Bursa Malaysia to introduce a US dollar and yuan-ringgit futures onshore exchange.

PETALING JAYA: Bank Negara will make it easier for local companies and individuals to hedge their US dollar and Chinese yuan requirements at home.

In its fight to fend off speculative attacks on the ringgit from traders taking positions in offshore markets, the central bank announced a pilot programme for the US dollar-ringgit and yuan-ringgit that allows companies to hedged their positions with minimal questions asked on the reasons for undertaking such transactions

The central bank also said the operational process for local companies to enter into hedging positions with local banks would be simplified.

Bank Negara governor Datuk Muhammad Ibrahim, in announcing three new measures, said that the overall objective was to allow local companies access to hedging facilities freely and directly with financial institutions incorporated here.

 

The first measure was to allow local companies to undertake hedging transaction for US dollar and yuan against ringgit without the need for sighting of the underlying documents.

“Subject to a position limit, only a declaration by the customers will be sufficient. Accordingly, cancellation of the hedging will also be freely allowed,” he said.

Previously companies tend to shy away from undertaking a hedge in the local markets, citing the need to comply with “tedious paper work”. This resulted in companies keeping their export proceeds for up to three months offshore – the maximum period allowed under the regulations – before converting them back to ringgit to bring the money onshore.

Some companies tend to use the period to go into a hedge in the offshore markets that is settled in US dollar.

The governor said that to further deepen the local hedging market, Bank Negara was working with the Securities Commission and Bursa Malaysia to introduce a US dollar and yuan-ringgit futures onshore exchange.

“Similar to the inter-bank market, these will, for now, be subject to position limits, and for now only applicable to residents. We shall review this policy from time to time, with a view to further liberalise the rules,” said Muhammad during his opening remarks at the Financial Markets Association annual dinner last Friday.

The third measure was to have a common understanding and consistent interpretation for what is required under the Foreign Exchange Administration (FEA) rules

“This will be an industry standard that sets the minimum due diligence and list of documents required for FEA,” said the governor.

Towards this end, the Financial Markets Committee (FMC) is in the final stages of rolling out the framework for easier understanding of what is required under the FEA.

“It is expected, through this important initiative that there would be better clarity and greater efficiency for the financial institutions and their customers in undertaking foreign exchange (FX) and hedging transactions,” said Muhammad .

The FMC comprises representatives from the financial institutions, Bank Negara, corporations and financial services provider and is responsible to come up with strategies to help the smooth running of the wholesale financial markets.

In recent weeks, the ringgit has come under attack from speculators taking advantage of the huge gap in the US dollar-ringgit exchange rate in the onshore and offshore markets.

The offshore market is also known as the ringgit non-deliverable foreign exchange (NDF) market and it is settled in US dollars.

The central bank noted that Malaysia’s onshore hedging facilities attracted little interest and was a small portion compared to the total foreign exchange transactions undertaken by the country.

In 2015, FX market transactions volume reached a staggering US$2.52 trillion, yet currency derivatives such as foreign exchange forwards and options only made up 5% and 1% of the total volume respectively.

The governor said this prompted several questions and among them was whether investors were able to hedge effectively or efficiently manage the exposures of their portfolios.

Muhammad told financial institutions that there were opportunities in deepening the hedging market for reasons beyond the requirements for trade or the real economy.

Towards this end, he drew attention to foreigners holding 33.7% of the government bonds.

“Where are they hedging their foreign exchange exposures? What product can the industry offer for them to hedge onshore? Given these obvious opportunities, we need to develop solutions that will benefit the industry as a whole,” he said.

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Nov 2016 18

Bank Negara seen keeping overnight policy rate at 3% (The Star)

Lee: ‘We now expect Bank Negara to cut rates only in the late first quarter of 2017, versus our previous expectation of a 25-basis-point cut at the November meeting.’Standard Chartered Research joins other research houses in...

Lee: ‘We now expect Bank Negara to cut rates only in the late first quarter of 2017, versus our previous expectation of a 25-basis-point cut at the November meeting.’

Lee: ‘We now expect Bank Negara to cut rates only in the late first quarter of 2017, versus our previous expectation of a 25-basis-point cut at the November meeting.’

Standard Chartered Research joins other research houses in forecast

PETALING JAYA: Standard Chartered Research is the latest among research houses to say that Bank Negara is likely to keep the benchmark overnight policy rate (OPR) unchanged at 3% when the central bank’s monetary policy committee meets next week.

The bank’s Asean research head Edward Lee said in a report that Bank Negara would maintain the OPR on resilient economic growth.

“We now expect Bank Negara to cut rates only in the late first quarter of 2017, versus our previous expectation of a 25-basis-point cut at the November meeting,” he said.

 

Most economists now expect the central bank to cut the OPR only in the first-half of next year. The ringgit’s weakness brought on by the uncertainty over US economic and trade policies will also influence Bank Negara’s decision. Policymakers will also have to take into consideration a US rate hike in mid-December, which could mean larger fund outflow from emerging markets like Malaysia.”

Lee said recent data showed that the Malaysian economy was stabilising despite some weakness.

“Third-quarter gross domestic product (GDP) growth surprised to the upside, at 4.3% year-on-year (y-o-y), bringing nine-month 2016 GDP growth to 4.15% y-o-y.

“This was within the Government’s growth forecast of 4.0%-4.5% for 2016, whereas the first-half growth of 4.05% was just above the low-end of the range,” he said.

“Sequential growth was also strong, at 1.5% quarter-on-quarter (seasonally adjusted), the fastest in seven quarters. Private consumption held up better than expected, while private investment offset the contraction in public investment,” Lee added.

He said that by sector, GDP data showed resilience.

“The services sector picked up pace versus the second quarter, growing 6.1% y-o-y. Services segments such as wholesale and retail trade, finance and insurance, and real estate and business services showed faster growth,” Lee said.

Bank Negara said in the latest quarterly economic briefing that the domestic economy remains resilient in spite of downside risks posed by external uncertainties.

It expects private consumption to be supported by measures to increase disposable income, and noted that investment activity remains anchored by ongoing infrastructure projects.

“This statement is similar to Bank Negara’s views published on Aug 12, following which it kept policy rates on hold in September. We believe the central bank continues to regard market communication as important, and it appears to be conveying a neutral monetary policy stance,” Lee noted, adding that the risks remain to the downside.

He said private consumption may have been boosted by measures such as voluntary cuts to the employee pension fund and minimum wage hikes, and one-off payouts to civil servants may have helped bolster spending.

“However, labour metrics continue to soften. In September, the seasonally adjusted unemployment rate rose to 3.5% and employment growth remained lacklustre at 0.7% y-o-y. High household leverage may also encourage people to save, as labour conditions deteriorate further,” Lee said.

He said that while Bank Negara recognises the challenging global economic conditions, it believes that further deterioration will require a monetary policy adjustment.

“Potential trade protectionist policies from the US and a hard impact on euro-area growth from Brexit are key risks that need monitoring.

“China remains the elephant in the room, but growth risks in the country appear stable for now,” Lee said.

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Nov 2016 17

Many other FTAs Malaysia can explore if TPP fails to launch, says MITI (New Straits Times)

BY FRANCIS DASSKUALA LUMPUR: Malaysia's trade volume is booming and there are hundreds of free trade agreements currently in effect for the nation's businesses to tap into to grow their business. Additionally, the proposed...

BY FRANCIS DASS

KUALA LUMPUR: Malaysia's trade volume is booming and there are hundreds of free trade agreements currently in effect for the nation's businesses to tap into to grow their business. Additionally, the proposed Regional Comprehensive Economic Partnership (RCEP) between the 10 member states of Asean (Malaysia, Brunei, Myanmar, Cambodia, Indonesia, Laos, the Philippines, Singapore, Thailand, Vietnam) and the six states with which Asean has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand) would easily offset any negative impact of the Trans Pacific Partnership (TPP) not taking off, should the US choose to cancel the deal. Minister of International Trade and Industry II Datuk Seri Ong Ka Chuan said this today when launching the FMM SME Conference 2016. "In terms of trade, from Jan-Sept 2016, we have achieved RM1.77 trillion in trade volume (export plus import), compared to last year when it was RM1.071 trillion during the same period. "You can see that our trade fundamentals are strong and we can do better," he said during the media conference at the event. "If the TPP had been implemented, then it would result in a negative impact. For Malaysia, this TPP has not been implemented and as such it will not impact us," he said when asked on the current uncertainty facing TPP under the incoming new administration led by president-elect Donald Trump in the United States. He added that there are 625 FTAs all over the world at the moment. Some are regional and the others bilateral and more than 400 of them have been signed and concluded and implemented. In light of this global integration of trade, he said the United States could not afford to close its doors to trade.


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Nov 2016 16

Weak ringgit to impact 5 sectors (The Star)

 PETALING JAYA: Exporters are back on investors’ radars, following the recent steep decline in the value of the ringgit against the greenback after the United States presidential election last week.However, there is no...

Clearer picture: A money changer worker counts US dollar notes for a customer in Kuala Lumpur. CIMB Research expects the ringgit’s volatility to contrinue until there is greater clarity on the new US administration’s economic and trade policies

 

PETALING JAYA: Exporters are back on investors’ radars, following the recent steep decline in the value of the ringgit against the greenback after the United States presidential election last week.

However, there is no rush yet to pick up bargain stocks on Bursa Malaysia.

The FBM KLCI took another big hit yesterday after falling by more than 1% for the second consecutive day amid heavy foreign sell-off.

“Fundamentally, we think markets may be overreacting to the ‘Trump risk’ in the near term, as speculative positioning takes hold,” said CIMB Research in a note to clients

 

On the volatility of the ringgit, it expects the trend to remain until there is greater clarity on the new US administration’s economic and trade policies.

The ringgit strengthened marginally yesterday to 4.33 against the US dollar.

CIMB Research said HeveaBoard BhdTop Glove Corp Bhd and Evergreen Fibreboard Bhd are among the companies that would gain the most from the weak ringgit in terms of earnings.

“Share prices of YTL Power International BhdGenting Plantations Bhd and Inari Amertron Bhd fell 1%-3% last Friday despite being beneficiaries of a weak ringgit. We have ‘add’ calls on these stocks and the selldown could present buying opportunities for investors,” it added.

The banking sector was also among the beneficiaries of the weaker ringgit on the back of overseas operations, CIMB Research said.

Among the banks that are set to benefit are Malayan Banking Bhd, RHB Bank Bhd, Hong Leong Bank Bhd and Public Bank Bhd.

On the other hand, CIMB Research reckoned that companies that have exposure to the automotive and airline industries, namely, Tan Chong Motor Holdings Bhd, Bermaz Auto Bhd, UMW Holdings BhdAirAsia Bhd and AirAsia X Bhd, would be negatively impacted from the stronger US dollar and yen.

“AirAsia will be impacted by the weaker ringgit, although this is buffered to some extent by the low oil prices. About 60%-70% of AirAsia’s costs are US dollar-denominated,” it added.

On the contrary, although many research houses are bullish on the export counters to benefit from the weak ringgit, Hong Leong Investment Bank (HLIB) Research said that the sector is vulnerable from president-elect Trump’s anti-trade views.

“While the market may continue to react to the strong US dollar, we caution that export stocks may still be affected by Trump’s anti-trade sentiment.

“The technology sector is more vulnerable to any trade policy change compared to resource-based sectors,” it said.

HLIB Research said the strong US dollar would be positive for sectors such as rubber product manufacturers, the gaming industry as well as technology companies.

It is negative for sectors such as automotive, aviation, telecommunications, consumer and power.

While the cheaper ringgit does not necessarily translate to higher exports for Malaysian products, companies such as rubber glove makers, semiconductors and furniture-related companies are expected to benefit from the weaker ringgit, according to analysts.

“Naturally, beneficiaries of the strong US dollar are exporters and companies with significant US-dollar assets,” said UOB KayHian in a report yesterday.

The research house prefers the electric and electronic manufacturers such as Inari, VS Industry Bhd and EG Industries Bhd on the back of revenue growth and margin improvement as compared to exporters.

“We are less enthusiastic on the loftily-valued rubber glove manufacturers, as the supply-demand dynamics for nitrile glove remain unfavourable.

“Hence, continuing downward pressure on the US dollar pricing of nitrile gloves could mostly offset the positive US dollar effect,” it said.

UOB KayHian reckoned that the stronger ringgit would not have a huge impact on exporters compared to in 2015.

“Since a strong US dollar is now a consensus view (unlike in 2015), buyers have actively squeezed down the US dollar pricing on Malaysian exporters, which reduces the quantum of the exporters’ windfall margins and hence the exporters’ ability to positively surprise on earnings,” it said.

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Nov 2016 15

Bank Negara assures no pegging of ringgit (New Straits Times)

BY ZARINA ZAKARIAH KUALA LUMPUR: Bank Negara Malaysia (BNM) will not be pegging the Ringgit as the currency should not be decided on speculative positioning. Speaking to reporters during the third quarter Gross Domestic...

BY ZARINA ZAKARIAH 

KUALA LUMPUR: Bank Negara Malaysia (BNM) will not be pegging the Ringgit as the currency should not be decided on speculative positioning. Speaking to reporters during the third quarter Gross Domestic Product (GDP) announcement today, BNM governor Datuk Muhammad Ibrahim touched on the erratic Ringgit movement in the morning. “The Ringgit should not be determined by speculative positioning and in this respect the FX market is actually a speculative positioning. “It is very important we allow the market to decide on the level of the Ringgit. Our Ringgit level must be supported and dictated by the underlying transactions as contracted by the banks on a daily basis. “In some circumstances, the Ringgit market will be volatile, and it is incumbent upon the Central bank to show its presence in the market by asking banks to ensure that the pricing are correctly done,” he said. “We do not want the market to be dictated by certain circumstances or matters that has nothing to do with the nation’s economic fundamentals,” he added. This was in response to rumours that the Central Bank has directed banks to freeze all FX derivatives and FX spot transactions involving the Ringgit. All other transactions involving only foreign currencies will continue. BNM has however confirmed that there was no such freeze and an official statement would be issued later today.



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