Ringgit outlook brightens in Moody's survey as reserves climb

[KUALA LUMPUR] The outlook for Malaysia's ringgit is turning brighter, according to more than half the respondents in a Moody's Investors Service survey.

The nation's improving trade surplus and foreign-exchange reserves, along with the halt in the US dollar's appreciation are supportive for the ringgit, Moody's wrote of its poll results.

The report titled Malaysia - Inside Asean: The View from Malaysia was based on a March 23 briefing in Kuala Lumpur and attended by 110 market participants. That was the same day the currency strengthened beyond 4 per dollar for the first time since August. Malaysia's currency has rallied more than 10 per cent this year, a turnaround from 2015 when it reached a 17-year low of 4.48 versus the dollar. Foreign-exchange reserves rose to US$97 billion in the last two weeks of March, while the trade surplus widened to 7.35 billion ringgit (S$2.56 billion) in February from 5.39 billion ringgit in January, official data showed last week.

Of those polled in Moody's survey, 53 per cent see the ringgit around 4-4.2 per dollar over the next 12 months and about a third see it in a range of 3.5 to 4. The currency was up 0.2 per cent at 3.8938 as of 2:41 pm in Kuala Lumpur on Monday.

The survey shows participants were less upbeat on the economy, with 58 per cent seeing a slowdown in gross domestic product growth to 4-4.5 per cent this year from 5 per cent in 2015.

"Given the open nature of its economy - with exports and imports combined accounting for 131 per cent of GDP - Malaysia is susceptible to a prolonged period of subdued global demand and weaker commodity prices, which will result in slower investment demand, and downward pressure on exports and government receipts," wrote Rahul Ghosh, a Moody's vice president and senior research analyst.

BLOOMBERG