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SINGAPORE: The Malaysian ringgit fell on Thursday as investors cut bullish positions ahead of the weekend general elections while most emerging Asian currencies edged down on worries about a global economic slowdown.
The Philippine peso and the South Korean won turned lower as foreign exchange authorities in the two countries were suspected of intervening to stem the appreciation of their currencies, traders said.
The ringgit slid as much as 0.5 percent to 3.0570 per dollar, its weakest since April 24.
The Malaysian currency had appreciated around 2.0 percent last month since April 3 when Prime Minister Datuk Seri Najib Tun Razak announced a general election.
Investors have been betting that the ruling Barisan Nasional coalition would win with a reduced parliamentary majority in the Sunday vote, and expect a new government would not make any major policy changes.
The ringgit may see a relief rally, probably to 3.0000, if the ruling coalition wins the election, analysts said.
However, investors booked profits as the election campaign intensifies.
“The ringgit could probably weaken to 3.10 first on uncertainty, especially if stocks sell off,” said BNP Paribas currency strategist Thio Chin Loo in Singapore, when asked if the ringgit will slide further in case of a victory for the opposition Pakatan Rakyat, an alliance led by former Deputy Prime Minister Datuk Seri Anwar Ibrahim.
An opposition victory would create unprecedented uncertainty in the political landscape in Malaysia.
Malaysia’s financial markets were caught napping in 2008 when shock electoral gains by the opposition redrew the country’s political map and sparked a 10 percent one-day plunge in the main stock index.
Still, the ringgit’s potential fall after the election may not last long barring the vote resulting in a hung parliament, said Saktiandi Supaat, head of FX research for Maybank in Singapore.
“If the election runs smoothly, a smooth transition is made and policy proceeds, the ringgit will stabilise,” said Supaat, adding his year-end target for the ringgit is at 2.9800 per dollar with continuous inflows.
“BNM will not tolerate too rapid moves either way,” he added, referring to the central bank, Bank Negara Malaysia. – Reuters
Ringgit eases before polls; Philippine peso, won down on intervention
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