Singapore Dollar’s Losses to Ringgit Seen Widening: Asean Credit
The diverging economic fortunes of two Southeast Asian neighbors are prompting PineBridge Investments to favor Malaysia’s ringgit over Singapore’s dollar.
The ringgit has gained 4% to 2.53 per Singapore dollar since reaching a 16-year low of 2.63 in February, data compiled by Bloomberg show.
“There is a strong, underlying trend supporting the Malaysian ringgit against the Singapore dollar,” Anders Faergemann, who helps oversee $4.3 billion of emerging-market debt as senior fund manager in London at PineBridge, said in an Aug. 15 e-mail interview.
The ringgit posted the biggest gains against the U.S. dollar of 31 major currencies tracked by Bloomberg in the past three months as surprisingly strong economic growth prompted traders to start pricing in two more rate increases by Zeti in a year.
Malaysia’s $312 billion economy expanded 6.4% in the three months through June, the fastest pace in six quarters, the government reported last week.
Singapore’s growth is trailing at 2.4%. The currency, which is used as the city-state’s key monetary policy tool, climbed 0.5% versus the greenback in the past three months.
Wong Chee Seng, a foreign-exchange strategist at AmBank Group in Kuala Lumpur, said the drop in Singapore’s dollar provides a buying opportunity because of its safe-haven status as the Federal Reserve prepares to start raising interest rates.
“There is still potential for the ringgit to appreciate against the Singapore dollar,” Suresh Kumar Ramanathan, a regional currency strategist in Kuala Lumpur at CIMB Investment Bank Bhd., said in an Aug. 14 phone interview.
Source: Bloomberg
