By Chris Shaw (Tokyo)<\/p>\n
Since moving from a pegged exchange rate to a managed float last year the Malaysian ringgit has risen almost 5% against the US dollar, with ANZ Bank suggesting further gains are likely.<\/p>\n
The currency is now trading at around 3.61 to the US dollar, but the bank suggests a level of 3.55 is likely by the end of 2006 and 3.50 could be achieved by the end of next year.<\/p>\n
It expects the currency’s performance against the Australian dollar to be even better, with the bank forecasting a rate of 2.49 to the dollar by the end of this year and 2.35 by the end of 2007, compared to 2.75 currently.<\/p>\n
Supporting its outlook for a stronger currency is the bank’s view a further 0.25% increase in interest rates is likely before the end of the year as inflation continues to increase, having reached 4.6% in April thanks to higher fuel prices. Also pushing inflation higher is the likelihood of higher electricity prices, leading the bank to lift its forecast for average inflation this year to 4% from 3.5% previously. <\/p>\n
The inflationary environment is also a factor of the nation’s productivity growth, which came in at 3% in 2005 and is forecast to reach 3.3% in 2006 thanks to high capacity utilisation. This lack of spare capacity could add to inflationary pressures as input costs are moving higher.<\/p>\n
The combination of higher interest rates and inflation is likely to impact on growth, the bank forecasting full year GDP to increase by around 5.3% both this year and next, which is below the central bank’s estimate of a 6% increase. Standard Chartered doesn’t agree though, suggesting the economy should remain strong despite the inflationary pressures. The bank has lifted its growth forecast for 2006 to 5.5% from 5% previously.<\/p>\n","protected":false},"excerpt":{"rendered":"
Malaysian interest rates should go up further and the country’s currency should therefore strengthen.<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[58],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/51631"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=51631"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/51631\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=51631"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=51631"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=51631"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}