rate hikes


Asia remains resilient amid market headwinds — Maybank Kim Eng


KUALA LUMPUR (June 21): Asia’s underlying fundamentals remain solid with resilient growth prospects despite headwinds from US-China trade friction and rising US interest rates, according to Maybank Kim Eng. The United States and China are expected to continue driving global growth and investment, which will benefit emerging Asia, the investment banking arm of Maybank Group said at its Invest Asia UK conference in London today, noting rising demand from the world’s two largest economies had supported Asia’s export recovery last year. Asia’s private investment is experiencing a revival this yearRead More

Asian currencies hit by stronger US dollar, Indonesian rupiah slumps

SINGAPORE, June 21 — All emerging Asian currencies weakened against a firming US dollar today, as comments by the US Federal Reserve chairman on the pace of rate hikes and a pick-up in US yields fuelled the greenback. Treasury yields rose…

Global stocks rise after selloff, US Treasury yields up on comments by Fed chair

NEW YORK, June 21 — Stocks on world markets edged higher yesterday, following a recent selloff on rapidly escalating China-US trade tensions, while Treasury yields rose after the Federal Reserve chairman said the US central bank should continue…

Philippine central bank chief builds case for another rate hike

MANILA, June 20 — Philippine central bank Governor Nestor Espenilla laid out the case for another interest rate increase, citing broadening price pressures, tighter US monetary policy and a currency slump. While Espenilla stopped short of saying…

Demand for dollar, US-China trade tensions to weigh on ringgit

PETALING JAYA: The ringgit, which fell below 4.00 to the US dollar Monday, is expected to see more losses, currency observers opine, as appetite for the greenback grows unabated and fears of a trade war between China and the US persist.

The ringgit hit an intraday low of 4.0015, before closing at 3.9985 to the dollar Monday.

ForexTime (FXTM) global head of currency strategy and market research Jameel Ahmad expects more losses for the ringgit with no signs of a slowdown in demand for the US dollar.

“The performance of the ringgit over the near future will be dependent on how the markets react to the latest instalment of concerns over China and the US entering a potential trade war. The concerns have increased since the end of last week, and resulted in risk aversion being seen in the markets,” he told SunBiz.

He said a number of different emerging market currencies across Asia began the new trading week on the back foot from the trade tensions between the US and China, including the yuan, with current losses close to 0.6%.

“The Indonesian rupiah, Malaysian ringgit, Philippine peso and Thai baht are just a few of the many Asian currencies to have followed the same lead. If the ringgit does fall below 4.00 against the dollar, then it's possible the new range for the ringgit will be between 4.00 and 4.50,” he said, adding that it will be no surprise if investors choose to invest in safe-haven assets such as the yen and gold again.

Jameel said the persistent nature of external factors manipulating the movements in a wide range of emerging market currencies makes it impossible to provide an outlook for where the ringgit could conclude at year-end.

“However it does appear that investors are determined to remain attracted towards the US dollar, which increases the probability that the ringgit could be set for a prolonged return below 4.00 against the dollar,” he said.

“One of the main reasons why the US dollar is being so heavily backed by investors is because of how far ahead the US is in terms of both economic progress and monetary policy, in comparison with its developed peers,” he added.

Jameel said the US economy and the Federal Reserve are offering investors consistency, something that other developed economies and central banks, such as the Bank of England, European Central Bank (ECB) and Bank of Japan, are ultimately unable to offer.

DBS Group Research FX strategist Philip Wee and rates strategist Eugene Leow said Asian currencies are facing depreciation pressures on two major fronts, the first being monetary policy divergences that have returned to support the US dollar globally.

“The Fed has affirmed that it will be moving to deliver a total of four, not three, rate hikes this year. The ECB has confirmed that asset purchases will end in December which forced markets to reverse earlier bets for the central bank to bring forward its rate hike into 2019,” they said in a research note Monday.

Secondly, US-China trade tensions have returned despite a better-than-expected outcome at the Kim-Trump summit and for the first time in half a year, Asia's export-dependent currencies have depreciated.

“The Singapore dollar and the Korean won depreciated past 1.35 and 1100 respectively. As for the region's three strongest currencies this year, the Thai baht has begun to depreciate for the year last week, with the Chinese yuan and Malaysian ringgit set to follow next,” they said.

Sunway University Business School economics professor Dr Yeah Kim Leng, however, believes the weakening of the ringgit is a short-term reaction due to the US rate hike and expects the local note to retrace its losses and end the year between 3.80 and 3.90 against the dollar, supported by long-term fundamentals such as current account surplus, high oil prices and positive growth.

Trade war between US and China intensifies

Fundamental outlook US and China’s trade war grew more intense the past week as both countries threaten new tariffs on imports between the two countries. The US Federal Reserve raised interest rate and signaled a possible two more hikes. The European Central Bank (ECB) are planning to exit the tapering plan by the end of […]

The FOMC in June, the expected path and the outlook ahead

THE Fed continues to have an optimistic view of the effects of its fiscal policy on economic activities and the ability of the US economy to withstand shocks. In past years, Fed chairs have cautioned that the outlook was uncertain and monetary policy was not on a pre-set path. While this remains true today, we […]

Crude Palm Oil Weekly Report – 15th June 2018

Malaysian palm oil futures extended losses, mainly contributed by the decision to maintain exports tax as well as lacklustre demand data reported from MPOB, SGS and AmSpec. The benchmark crude palm oil futures (FCPO) contract fell 4.22 per cent to RM2,336 on Thursday, which was RM103 lower than RM2,439 recorded during the previous week on […]

Asian shares shaky as US readies China tariffs, euro at two-week low on ECB

TOKYO, June 15 ― Asian shares wobbled today as investors braced for US tariffs against China, while the euro flirted with two-week lows after a cautious European Central Bank indicated it would not raise interest rates for some time. US President…

Dollar soars and Wall Street gains as ECB holds off on rate hikes

NEW YORK, June 15 ― The US dollar rose more than a penny against a basket of major currencies as the euro cratered, and US stocks closed higher yesterday, as the European Central Bank signalled interest rate hikes were a long way off. The bank's…