MALAYSIA’S ECONOMY ON THE RIGHT TRACK, GERMAN EXPERTS SAY
0 Comments | BERNAMA; Malaysian National News Agency, Aug 27, 2010
from BERNAMA, The Malaysian National News Agency FRANKFURT, Aug 27 (Bernama) — Not many Germans know the name of Malaysia’s currency except, of course, those who have visited Malaysia or have had commercial dealings with that country.
However, forex traders in Frankfurt, Germany’s economic capital, are not only familiar with the ringgit but also know why the currency has become so strong in recent weeks.
Forex analysts in Frankfurt closely monitor the developments in the home countries of a number of currencies, including Malaysia, to find out what influences the direction of a particular currency.
The ringgit’s current strong position is linked to the performance of the Malaysian economy which has been doing very well, resulting in the ringgit’s strength.
Some emerging economies still continue to groan under the pain of the credit crisis. However, Malaysia’s economy has, in fact, even surpassed the expectations of many economists.
The Malaysian economy, as German experts say, is on the right track.
The first quarter of the current year, for example, provided a 10.1 per cent growth while the second quarter clocked a growth rate of 8.9 per cent, the strongest growth in a decade.
Malaysia is projected to achieve a gross domestic product (GDP) growth exceeding 6.0 per cent for the entire year, according to Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz.
This strong growth is having an impact on the forex market. The Malaysian ringgit, which at the height of the credit crisis was under tremendous pressure, has appreciated lately.
Of the Asian currencies, the ringgit looks the strongest this year, if one excluded the Japanese yen.
At its current rate at US$0.3179, the ringgit has appreciated some 11.6 per cent in relation to the greenback during the past 12 months.
Indeed, compared to the euro which presently fetches some 3.9863 ringgit, the Malaysian currency has appreciated by 20.86 per cent in the same period.
In relation to the euro, the upsurge in the ringgit’s value has not been consistently maintained. However, the ringgit has certainly been able to assert its strong position vis-a-vis the US dollar, reaching this week a stable 3.1238 ringgit to a dollar, the highest recorded value since October 1997.
Many Germans also say that Malaysia’s domestic economy is resilient and capable of resisting pressure, giving rise to the impression that the planners in Malaysia could live with the rise in the value of the ringgit.
Although short-term losses in the stock market would be inevitable, the overall picture is of a depreciating dollar in its relationship to the ringgit.
A stronger ringgit would, also, have a negative impact on Malaysia’s exports which would become more expensive in the major markets of the world where almost everything is quoted in dollar figures
