Market Uncertainty Causes Ringgit's Fluctuation Versus US Dollar: Maybank

By Tengku Noor Shamsiah Tengku Abdullah SINGAPORE, April 1 (Bernama) -- Uncertainties in the currency market driven by greed and fear have led to the fluctuation of the value of the ringgit (Malaysia's currency), which should be trading at US$0.89 (RM3.30) versus the US dollar based on the currency fundamentals, says Malayan Banking Bhd president and chief executive Abdul Farid Alias. Asked whether rising interest rates would affect the local currency, Abdul Farid said a lot of volatility is driven by liquidity movement. "And lquidity movement is driven by only two things -- by greed or by fear. A lot of these things are happening because there is a lot of uncertainty and we don't only have one variable at the same time. "We have external variables that we are working on with respect to the economies of the US, Europe, China and Japan, we also have the domestic variables moving at the same time, and within that environment there are other variables as well," he told reporters at a press conference held in conjunction with the Asean Invest 2015 conference here Tuesday. "Do we think that the ringgit would be affected (by interest rates)? It could be, and it could be the other way as well," he said. He pointed out that academics and market practitioners look into the interest rate priority perspective when valuing the currency. "Taking into account the reserves that we have and the differences in interest rates, both for spot and future, the ringgit should be trading at RM3.30 but it is not. "That is due to liquidity and fear. How long will this go on? I am not so sure, but fundamentally the ringgit should be traded at RM3.30," he said. Today (Wednesday), the ringgit rebounded to close stronger against the greenback and other major currencies on technical consolidation. At 5 pm, the ringgit was quoted at 3.7020/7050 versus the greenback compared with 3.7090/7130 on Monday. --BERNAMA