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Straits Times
22-05-2025
- Business
- Straits Times
Ringgit may gain most in South-east Asia on exporter conversion
The Malaysian ringgit was the second-biggest gainer among emerging market currencies in South-east Asia so far this year with a rise of 5 per cent. PHOTO: ST FILE SINGAPORE – Malaysia's ringgit stands to gain the most among its South-east Asian peers if the nation's exporters convert their overseas earnings to the local currency, thanks to the nation's outsized foreign-currency deposits. Such deposits in Malaysia, Thailand, the Philippines and Indonesia combined have jumped to US$62.2 billion (S$80.53 billion) as of March, close to a record high set in the previous month, according to Bloomberg calculations. Malaysia made up almost all of it and the nation's foreign deposit growth also outpaced most of its peers. Foreign deposits in the region are coming under greater focus as investors watch for signs of companies converting them to local currencies, as market perception of the dollar sours due to concern over US policymaking and its economic outlook. Heavy foreign-exchange sales by Taiwanese exporters earlier this month helped the local dollar post its biggest single-day jump since 1988. 'Acceleration in broad dollar softness may risk triggering exporters rushing to sell their dollar holdings and that cycle, if it happens, it may result in excessive local currency strength,' said Mr Christopher Wong, a senior foreign-exchange strategist at Oversea-Chinese Banking Corp. Most major South-east Asian currencies have already rallied to their highest levels this year amid the dollar's decline and as a temporary trade truce between the US and China improved market sentiment. While excessive currency gains may invite the ire of local authorities, some appreciation may be welcomed as it would open the door for further interest-rate cuts by reducing the depreciation pressure on local currencies. The Malaysian ringgit was the second-biggest gainer among emerging market currencies in South-east Asia so far this year with a rise of 5 per cent. Earlier this year, the nation's policymakers urged exporters to convert their earnings into ringgit in a more timely manner to help buoy the local currency. Malaysia's foreign deposits grew to 10.6 per cent of the total as of March, according to latest data from the nation's central bank. That is 1.6 standard deviations higher than the five-year average. The same gauge for Thailand, the Philippines and Indonesia stood at 2, 1.3 and 1.1, respectively. South-east Asian investors loaded up on dollar-denominated investments during a period of rising returns on US assets. The US Federal Reserve's aggressive rate hike cycle in 2022 and 2023 took the upper bound of the Fed fund rate to 5.50 per cent – higher than even the policy rates in Thailand and Malaysia. Currency returns provided another incentive, with the Bloomberg Dollar Spot Index rising 10.5 per cent in the five years to the end of 2024. While investors have pared extreme bearishness over dollar assets seen in April – when US President Donald Trump announced reciprocal tariffs and spurred doubts over the Fed's independence – the US fiscal stance is giving investors another reason to shun the greenback. 'Asian exporters should continue to convert their dollars into local currencies, after several years of building up dollar deposits,' Goldman Sachs Group strategist Danny Suwanapruti wrote in a note last week. The bank favors the ringgit, Singaporean dollar, won and the Taiwanese dollar if trade deals are reached, the yuan rallies to 7 per dollar and if exporters continue to sell the greenback. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
Malaysian Reserve
22-05-2025
- Business
- Malaysian Reserve
Ringgit may gain most in Southeast Asia on exporter conversion
MALAYSIA'S ringgit stands to gain the most among its Southeast Asian peers if the nation's exporters convert their overseas earnings to the local currency, thanks to the nation's outsized foreign-currency deposits. Such deposits in Malaysia, Thailand, the Philippines and Indonesia combined have jumped to $62.2 billion as of March, close to a record high set in the previous month, according to Bloomberg calculations. Malaysia made up almost all of it and the nation's foreign deposit growth also outpaced most of its peers. Foreign deposits in the region are coming under greater focus as investors watch for signs of companies converting them to local currencies, as market perception of the dollar sours due to concern over US policymaking and its economic outlook. Heavy foreign-exchange sales by Taiwanese exporters earlier this month helped the local dollar post its biggest single-day jump since 1988. 'Acceleration in broad dollar softness may risk triggering exporters rushing to sell their dollar holdings and that cycle, if it happens, it may result in excessive local currency strength,' said Christopher Wong, a senior foreign-exchange strategist at Oversea-Chinese Banking Corp. Most major Southeast Asian currencies have already rallied to their highest levels this year amid the dollar's decline and as a temporary trade truce between the US and China improved market sentiment. While excessive currency gains may invite the ire of local authorities, some appreciation may be welcomed as it would open the door for further interest-rate cuts by reducing the depreciation pressure on local currencies. The Malaysian ringgit was the second-biggest gainer among emerging market currencies in Southeast Asia so far this year with a rise of 5%. Earlier this year, the nation's policymakers urged exporters to convert their earnings into ringgit in a more timely manner to help buoy the local currency. Malaysia's foreign deposits grew to 10.6% of the total as of March, according to latest data from the nation's central bank. That's 1.6 standard deviations higher than the five-year average. The same gauge for Thailand, the Philippines and Indonesia stood at 2, 1.3 and 1.1, respectively. Southeast Asian investors loaded up on dollar-denominated investments during a period of rising returns on US assets. The Federal Reserve's aggressive rate hike cycle in 2022 and 2023 took the upper bound of the Fed fund rate to 5.50% — higher than even the policy rates in Thailand and Malaysia. Currency returns provided another incentive, with the Bloomberg Dollar Spot Index rising 10.5% in the five years to the end of 2024. While investors have pared extreme bearishness over dollar assets seen in April — when President Donald Trump announced reciprocal tariffs and spurred doubts over the Fed's independence — the US fiscal stance is giving investors another reason to shun the greenback. 'Asian exporters should continue to convert their dollars into local currencies, after several years of building up dollar deposits,' Goldman Sachs Group Inc. strategist Danny Suwanapruti wrote in a note last week. The bank favors the ringgit, Singaporean dollar, won and the Taiwanese dollar if trade deals are reached, the yuan rallies to 7 per dollar and if exporters continue to sell the greenback. –BLOOMBERG
New Straits Times
22-04-2025
- Business
- New Straits Times
Singapore stocks headed for sixth day of gains; Asian currencies slip
KUALA LUMPUR: Singapore stocks rose for a sixth straight session on Tuesday, marking their longest winning streak in over four months, while recent gains in emerging Asian currencies fizzled out as the dollar steadied after a sharp drop. Singapore's Straits Times index rose up to 1.7 per cent, their highest since April 4, driven by top banks DBS Group and Oversea-Chinese Banking Corp. The city-state's defensive and high-yielding stocks, once sidelined for their limited growth outlook, have drawn renewed interest from foreign investors seeking steadiness through rampant volatility. "Singapore can be viewed as a safe haven in the current turbulent environment. It has an attractive dividend yield, resilient currency and multi sectors that are not directly exposed to tariffs," said Paul Chew, Head of Research at Phillip Securities. Investors were likely to remain focused on defensive sectors, with global markets expected to stay volatile in the coming months, said Carmen Lee, Head of OCBC Investment Research. Elsewhere in Southeast Asia, markets were mixed, with Jakarta up 0.9 per cent and Bangkok flat, while Taiwan fell 1.6 per cent to a near two-week low, tracking weak cues from Wall Street. In Malaysia, both the ringgit and the local benchmark index were trading in the red after an advance print on Monday showed gross domestic product moderating in the first quarter and prompted brokerages to revise their annual growth expectations. Brokerages Barclays and CGS International Securities downgraded their annual gross domestic product growth estimates for Malaysia, while Citigroup saw "downside risks" to annual growth. Currencies in the Philippines and Taiwan edged lower after hitting multi-month highs in earlier sessions. The South Korean won drifted marginally higher. Mizuho Bank's chief Asian FX strategist, Ken Cheung Kin Tai, said the lingering concerns over US reciprocal tariffs and US recession could dampen the risk appetite for emerging currencies. The Indonesian rupiah, among the worst-performing emerging market currencies globally, has depreciated around 5 per cent this year amid concerns over fiscal spending plans and capital flight driven by tariff fears. The currency was trading 0.3 per cent lower ahead of Bank Indonesia's policy decision on Wednesday, where the central bank is widely expected to stay pat on interest rates. The US dollar was trading 0.2 per cent lower at 98.18.
Yahoo
11-04-2025
- Business
- Yahoo
Dollar Emerges as Latest Victim of This Week's Markets Mayhem
(Bloomberg) -- The dollar has emerged as the latest victim of this week's market turmoil as a worsening global trade war risks derailing US economic growth. Midtown Office Building Evacuated on Concerns of Wall Collapse In Chicago, a Former Steel Mill Looks to Make a Quantum Leap The Secret Formula for Faster Trains NYC Tourist Helicopter Crashes in Hudson River, Killing Six Inside the Quiet, Extravagant Expansion of the Frick Collection A Bloomberg gauge of the greenback tumbled to a fresh six-month low Friday after China raised tariffs on all US goods from 84% to 125% with effect from April 12. Options traders turned bearish for the first time in five years as part of a broader exodus from US assets as trade tensions between the world's two largest economies continued to intensify. Havens such as the yen, Swiss franc and gold benefited from the outflows while the euro rose to its strongest in three years. 'Dollar confidence is under threat,' said Christopher Wong, a foreign-exchange strategist at Oversea-Chinese Banking Corp. Doubts are growing about the greenback's status as a reserve currency due to factors including fading US exceptionalism and ballooning US debt, he added. Traders are not only losing confidence in the dollar's long-term prospects — they're doing so at the fastest pace on record. One-year risk reversals, a key gauge of demand for upside versus downside exposure in the greenback against major peers, have flipped in favor of dollar downside for the first time in five years. A Z-score analysis — which measures how far current pricing deviates from historical norms — shows that the speed and magnitude of the shift toward bearish dollar positioning is not only significant, but the most extreme on record. It underscores the scale of the sentiment reversal, suggesting traders are rapidly recalibrating long-held assumptions about the greenback's role as a haven and store of value. Friday's moves will round off yet another turbulent week for global markets as President Donald Trump's fast-evolving trade policy leaves investors struggling to figure out their next move. The dollar recorded its biggest plunge in over two years on Thursday amid growing expectations that the Federal Reserve will have to lower borrowing costs to counter the contractionary impact of US tariffs. Other US assets also suffered. The S&P 500 Index finished the day 3.5% lower on Thursday, while long-term Treasuries sank. Overnight indexed swaps have priced in 90 basis points of Fed rate cuts for the year. Haven Bids Havens witnessed a surge in demand amid the flight to quality. The yen rallied 1.4% to 142.43 per dollar on Friday, the strongest level since September. The Swiss franc soared as high as 0.8113 to the greenback, a level last seen in early 2015, while gold rose to a fresh record. The euro also benefited from the broad weakness in the dollar and climbed to $1.1416, the highest since February 2022. The move reflects emerging haven-like dynamics, bolstered by Germany's historic suspension of its debt brake last month. Euro Is Becoming a Destination, Not Just a Trade: Trader Talk The rapidly deteriorating outlook for the US economy is a sea change from earlier expectations that Trump's return to the White House would usher in an era of lower taxes, quicker growth and a stronger dollar. Traders are now watching for Beijing's response after the White House clarified US tariffs on China rose to 145%. There's also uncertainty about what will happen after the 90-day pause for higher tariffs on dozens of other nations is over. 'Unless you think some resolution is imminent, then the market is likely stay on the current path of least resistance — a dollar exit,' said Rodrigo Catril, strategist at National Australia Bank Ltd. in Sydney. 'The narrative of exiting US assets and selling the dollar is likely to persist as long as trade tensions remain elevated.' The exodus from U.S. assets is becoming a game-changer for currency volatility. The cost of hedging swings in major exchange rates is climbing, with euro volatility reaching its highest level since 2020 and the Swiss franc hitting highs not seen since 2016. --With assistance from Ruth Carson. (Updates with pricing, China tariffs) Trump Is Firing the Wrong People, on Purpose World Travelers Are Rethinking Vacation Plans to the US AI Coding Assistant Cursor Draws a Million Users Without Even Trying Cheap Consumer Goods Are the American Dream, Actually How One MBA Grad Blew the Whistle on a $2 Billion Deal ©2025 Bloomberg L.P. Sign in to access your portfolio
Yahoo
09-04-2025
- Business
- Yahoo
Gold bounces higher as trade turmoil hurts dollar, Treasurys
(Bloomberg) — Gold (GC=F) rose the most in nearly a year as global markets gyrated and the dollar weakened after US President Donald Trump risked a brutal global trade war with sweeping new import tariffs. A vicious selloff of US government bonds — typically a safe haven in times of turmoil — underscored a jittery day for investors as Trump's historic trade measures came into effect. Bullion extended recent declines before swinging higher to gain as much as 2.3% 'Gold's rebound reflects growing investor anxiety over tariff threats and the potential reshaping of global trade norms,' said Christopher Wong, a foreign currency strategist at Oversea-Chinese Banking Corp. Bullion remains a good hedge against a more disorderly global economy, he said. Trump placed higher duties on roughly 60 trading partners, with China facing a punitive tariff of 104% on its goods. Beijing held back from immediate retaliation, but promised countermeasures and reiterated that it's ready to 'fight to the end' in the face of escalating US trade measures. Gold has enjoyed a powerful run — including a record high last week — but has been caught up the global selloff over the past week as the scale of Trump's trade shake-up was revealed. Even though bullion is a traditional haven, extreme market disruptions can prompt investors to sell the asset to cover losses elsewhere. The precious metal is still seen having more upside, after a gain of nearly 30% over the past year on central bank buying and growing geopolitical tensions. There's also speculation that heightened volatility may prompt the Federal Reserve to speed up rate cuts to prevent a recession. Lower rates typically benefit gold, which doesn't pay interest. Gold for immediate delivery was up 2.1% to $3,046.02 an ounce at 3:39 p.m. in Singapore. The Bloomberg Dollar Spot Index fell 0.5%. Silver, palladium and platinum were up. —With assistance from Jason Scott. More stories like this are available on ©2025 Bloomberg L.P. By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy
