THE treasury market is set for a busier year in 2004, driven by better<\/p>\n
economic prospects and speculation over a possible change in the ringgit<\/p>\n
peg to the US dollar.<\/p>\n
“The growth potential for treasuries is tremendous this year,” said RHB<\/p>\n
Bank Bhd executive vice-president Michael Lim.<\/p>\n
RHB is one of the top three treasury players in the country.<\/p>\n
More money is expected to flow into the country this year as investors<\/p>\n
are betting on better corporate earnings as well as currency gains.<\/p>\n
With Malaysia’s economy expected to accelerate at least one percentage<\/p>\n
point faster than it did last year, all sectors are anticipated to reap<\/p>\n
the bounty. Exporters, in particular, will ride on the recovering global<\/p>\n
market, beefing up the trade surplus and the central bank reserves<\/p>\n
further.<\/p>\n
Improved business sentiment has in turn spurred a rally in the treasury<\/p>\n
market, which Lim said is “pulling the foreign funds in”.<\/p>\n
Treasury business makes up 20 to 25 per cent of RHB’s group income.<\/p>\n
Lim said that capital from hedge funds and investment banks could also<\/p>\n
have flowed into Malaysia in anticipation of the change in the ringgit<\/p>\n
peg.<\/p>\n
The ringgit, currently pegged at RM3.80 to US$1, has been under<\/p>\n
increasing scrutiny lately as the US dollar hit fresh lows against the<\/p>\n
euro, pulling the ringgit down with it.<\/p>\n
Should the ringgit appreciate after a change in the peg, investors who<\/p>\n
bought shares on the Kuala Lumpur Stock Exchange will reap a bonus in<\/p>\n
favourable foreign exchange gains.<\/p>\n
“They take the view that the ringgit should be stronger and this is<\/p>\n
attracting a little bit of money in,” said Lim.<\/p>\n
The Kuala Lumpur Stock Exchange Composite Index (KLCI) has leapt 5 per<\/p>\n
cent in the last month, pushed up by investors’ bullishness. The KLCI<\/p>\n
reached a 42-month high on Monday, but lost 1 per cent in the last two<\/p>\n
days – alarmed by the fear of the spreading bird flu in several Asian<\/p>\n
countries.<\/p>\n
According to Bank Negara Malaysia’s monetary update that was released<\/p>\n
yesterday, the ringgit recovered slightly against the euro by 0.9 per<\/p>\n
cent while depreciating against the pound sterling by 1.8 per cent this<\/p>\n
month. It weakened 0.7 per cent against the yen.<\/p>\n
Similarly, the ringgit was mixed against the regional currencies. It<\/p>\n
strengthened against the Philippine peso by 0.5 per cent while<\/p>\n
depreciating against other regional currencies in the range of 0.2 per<\/p>\n
cent to 1.5 per cent.<\/p>\n
Lim, nevertheless, does not expect any change in the ringgit peg<\/p>\n
despite the sliding dollar.<\/p>\n
“The peg has brought us a lot of goodies. The US dollar is only one<\/p>\n
part of the equation. We should be more concerned about our trading<\/p>\n
partners’ currencies,” he said.<\/p>\n
Bank Negara has indicated that Malaysia will only consider revaluing<\/p>\n
its currency if it is more than 20 per cent undervalued compared to the<\/p>\n
regional currencies. This has yet to happen.<\/p>\n
“The ringgit ought to be at around RM3.67 per US dollar. If you look at<\/p>\n
the RM3.80 we have now, it’s not much difference,” said Lim.<\/p>\n","protected":false},"excerpt":{"rendered":"
THE treasury market is set for a busier year in 2004, driven by better economic prospects and speculation over a possible change in the ringgit peg to the US dollar. “The growth potential for treasuries is tremendous this year,” said […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2244","post","type-post","status-publish","format-standard","hentry","category-hedgeco-news"],"_links":{"self":[{"href":"https:\/\/staging.hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/2244","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/staging.hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.hedgeco.net\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=2244"}],"version-history":[{"count":0,"href":"https:\/\/staging.hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/2244\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=2244"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=2244"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=2244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}