Malaysia's central bank will sell the ringgit to prevent the currency rising past 3.5 per US dollar for the next three months, drawing "a line in the sand" to protect exporters' earnings, Goldman Sachs Group Inc said.
Bank Negara Malaysia wants to avoid imposing the kind of capital controls that have caused foreign investors to shun Thailand, said Adam Le Mesurier, an economist at Goldman in Singapore.
The central bank, which has allowed the ringgit to gain 7.8 percent since ending a fixed exchange rate in 2005, said it hasn't set a predetermined level for the currency.
"The immediate neighbors of Thailand are hyper-sensitive to sending negative signals to foreign investors," Le Mesurier said.
Instead, the central bank has "drawn a line in the sand and hopes the market takes the hint."
The ringgit has risen 0.8 percent this year, the second-best performer of 15 Asia-Pacific currencies after the Thai baht, as foreign investment led an acceleration in economic growth and lifted the benchmark stock index to the highest in a decade.
The ringgit's rally has stalled at 3.5 for the past two weeks and Malaysian Prime Minister Abdullah Ahmad Badawi said on Jan. 27 that currency swings threaten to hurt profit at exporters. The ringgit traded at 3.5005 per dollar as of 6:12pm in Kuala Lumpur.
Goldman forecasts the currency will strengthen to 3.45 in 12 months after remaining little changed for three months, Le Mesurier and fellow economist Mark Tan wrote in a report published last Friday.
"Every day they're buying dollars at 3.5 and increasingly in larger amounts," Le Mesurier said in an interview the same day.
"Their primary issue is to control the pace of gains as they're starting to think it's getting out of control," he said.
Malaysia defended the ringgit from appreciating in 2004 by soaking up speculative foreign capital inflows, the central bank wrote in a report published March 2005.
Governor Zeti Akhtar Aziz wrote in the report that the returns from managing reserves exceeded the costs involved in such operations.
Bank Negara doesn't have a "predetermined rate" for the currency, Zeti told reporters in Kuala Lumpur yesterday.
Still, she said "the central bank will do everything that is necessary in terms of maintaining orderly market conditions."
Malaysia's foreign-exchange reserves rose 17 percent to US$82.7 billion on Jan. 15 from the end of 2005.
The government introduced the ringgit peg at 3.8 per dollar in September 1998 after currencies across Asia collapsed, causing banks to default on their overseas debts.
Then prime minister Mahathir Mohamad attacked hedge funds for their role, describing investor George Soros as a "moron."
Abdullah ended the seven-year peg on July 21, 2005, and wants to attract overseas investors.
The economy may expand 6 percent this year, the Malaysian National News Agency quoted Second Finance Minister Nor Mohamed Yakcop as saying.
It grew about 5.8 percent last year, the agency said.
Nor said on Dec. 19 that the government wouldn't follow Thailand in restricting foreign investors.
Thailand imposed penalties for withdrawing funds invested within a year and capped foreigners' stakes in Thai companies, causing global bond funds to shun its market and prompting multinationals to reconsider expansion.
"Prime Minister Abdullah has been very professional in his dealing with local and foreign investors," said Arjuna Mahendran, a strategist at Credit Suisse in Singapore. "I certainly wouldn't want to see in Malaysia what Thailand did."
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts