KUALA LUMPUR: Standard Chartered Global Research has raised its short-term forex rating on the ringgit to Overweight from Neutral.
It said on Monday, March 7 that high commodity prices are a positive for the ringgit as they should support growth and external balances.
'In addition, we expect Bank Negara Malaysia (BNM) to raise the policy rate to 3.5% in 1H, which should support capital inflows into Malaysia. Finally, we expect the pace of Chinese yuan (CNY) appreciation to gain speed this year. This should make gradual appreciation of the MYR nominal effective exchange rate (NEER) tolerable to Malaysian authorities after it has been broadly stable since May 2010,' it said.
Standard Chartered Global Research said it expected Malaysia's 2011 current account (C/A) surplus to improve to 17% of GDP from 12% of GDP in 2010.
'We see the Malaysian government's pro-investment strategy as a medium-term positive for the ringgit, as it should stimulate capital inflows. Finally, the ringgit real effective exchange rate (REER) is currently around its average level since January 1994,' it said.
The research house said based on Malaysia's external balances and forex reserves, the ringgit REER has some room to appreciate.
It said on Monday, March 7 that high commodity prices are a positive for the ringgit as they should support growth and external balances.
'In addition, we expect Bank Negara Malaysia (BNM) to raise the policy rate to 3.5% in 1H, which should support capital inflows into Malaysia. Finally, we expect the pace of Chinese yuan (CNY) appreciation to gain speed this year. This should make gradual appreciation of the MYR nominal effective exchange rate (NEER) tolerable to Malaysian authorities after it has been broadly stable since May 2010,' it said.
Standard Chartered Global Research said it expected Malaysia's 2011 current account (C/A) surplus to improve to 17% of GDP from 12% of GDP in 2010.
'We see the Malaysian government's pro-investment strategy as a medium-term positive for the ringgit, as it should stimulate capital inflows. Finally, the ringgit real effective exchange rate (REER) is currently around its average level since January 1994,' it said.
The research house said based on Malaysia's external balances and forex reserves, the ringgit REER has some room to appreciate.
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