Week ending Friday, 21 May 2010 : FX Ringgit

[scott]

hi,

The FX reports on the ringgit and other currencies for the week ending Friday, 21st May 2010. These are yesterday's rates. These reports taken from Starbizweek, Saturday "The Star" newspaper.


AmbankResearch
Volatility spiked in the foreign exchange market precipitated by heightened global risk aversion amidst escalating fears of a contagion effect emanating from Greece's debt crisis.

Flight to safety benefited the US dollar with the euro tumbling to a 4-year low against the greenback near the 1.2100 handle before recovering to 1.2600 levels.

At the point of writing, the Asian Dollar Index which tracks 10 Asian currencies also registered a decline by 1.6% since the beginning of the week. In tandem with the weakness in Asian currencies, the Ringgit declined 3.9% during the week, trading in a wide range of 3.3235 to 3.1925 against the US dollar.

Moving forward, we expect volatility to remain elevated, prompted by jitters arising from the prospects of adverse spillover effects from the European debt crisis. As such, we are of the opinion that USD/MYR could trade in a range of 3.2700 to 3.3500 in the coming week with bias on the upside.

Our views however would be negated should concrete evidence of a concerted intervention to halt EU's crisis emerge, such as interventions by the European Central Bank or further commitment for multilateral assistance.
Starbizweek


Foreign Exchange
GBP/USD open 1.4493 close 1.4382
EUR/USD open 1.2454 close 1.2496
USD/JPY open 92.55 close 89.95
USD/CHF open 1.1173 close 1.1508

Last week the German government's decision to ban short selling in financial institution shares, euro government bonds and credit default swaps caused investors to sell the euro currency.

The euro remained vulnerable throughout the week on concerns that other European countries may announce similar regulations. Elsewhere, higher yielding currencies came under heavy selling pressure as concerns over policy makers' response to the euro zone debt fueled risk aversion.

The US dollar got a safe haven bid against most major currencies but extended losses against the yen after data showed the number of US workers filing new applications for unemployment rose for the first time since April. The report added to the market's risk aversion, prompting unwinding of carry trades.

The Australian dollar came under heavy further selling pressure against the dollar and yen from the unwinding of carry trades and flight to safety. The Australian dollar is classed as a high yielding currency where domestic Australian interest rates are higher than its trading partners and other nations and any expectation of a global slowdown could hurt the currency.

USD/MYR open 3.1900 close 3.3200
GBP/MYR open 4.6233 close 4.7748
EUR/MYR open 3.9728 close 4.1487
JPY/MYR open 3.4468 close 3.6909
CHF/MYR open 2.8551 close 2.8849

Massive deleveraging flows impacted the ringgit as investors reduced their short dollar positions in view of global market uncertainty. The sharp deterioration in regional currencies was exacerbated by a lack of liquidity to manage the decline.

On the back of the risk aversion trades the local currency traded significantly lower to 3.3250/USD before closing the week at 3.3200/USD.
Starbizweek

[scott]

hi,

This is the Bernama report for the ringgit so far this week. I've been following the ringgit recently because it's suddenly turned south for no real reason. Or at least any that I can fathom out. It's edging back up to 2.40 vs the S$ which is where it was most of last year and this. After Singapore's MAS announced an appreciation of the S$ it was the ringgit that appreciated.

26 May, 2010 : FOREX: Ringgit Opens Firmer Against US Dollar
KUALA LUMPUR, May 26 (Bernama) -- The ringgit opened firmer against the US dollar on Wednesday following reports that four Spanish banks planned to merge amid concerns over solvency in the banking sector, a dealer said.

At 9.02am, the ringgit was traded higher at 3.3400/3.3430 against the greenback from yesterday's close at 3.3610/3650.

"Despite most players staying on the sidelines on fears that the Eurozone sovereign debt issue will spillover to Spain and Portugal, the ringgit "cool down" without any apparent reason owing to lack of fresh leads on the local front," said RHB Bank forex dealer Badeeudin Mohd Abu Bakar.

He however said investors remained nervous over Eurozone concerns.

As compared to other major currencies, the ringgit was mixed.

It was stronger against the Singapore dollar at 2.3631/3672 from 2.3651/3702 yesterday and firmer against the Japanese yen at 3.7017/7066 from 3.7469/7518 Tuesday.

It however weakened against the euro to 4.1109/1162 from 4.1021/1077 yesterday and was lower against the British pound to 4.8066/8116 from 4.7941/8008 Tuesday.
BERNAMA
End of Article
http://www.bernama.com/bernama/v5/newsmarket.php?id=501163