SINGAPORE: Malaysian exporters are likely increasing conversions of their foreign-currency earnings into the ringgit, which stands to boost the local exchange rate through the rest of the year, analysts say.
Malaysia’s foreign-currency deposits fell 8.6% to RM308bil (US$75.5bil) in August, the sharpest monthly decline since 2010, according to most recent central bank data.
The drop indicates that exporters, benefiting from semiconductor shipments, may be converting those earnings into ringgit.
While September trade figures are scheduled for release next week, BNP Paribas SA expects ongoing corporate conversions to support the ringgit.
That momentum, combined with robust economic fundamentals and foreign direct investment inflows, should help lift the currency to 3.90 per dollar by June 2027 from around 4.08 currently, according to the bank.
“We expect corporate conversion flows to rise from onshore exporters seeking to reduce the rising foreign exchange (FX) exposure and from foreign direct investment inflows such as for the construction of data centres,” said Parisha Saimbi, EM Asia FX and rates strategist at the bank.
Foreign investments have poured into Malaysia, which has become a major Asian hub for semiconductor manufacturing and data centres. — Bloomberg
