Asian Financial Crisis

With inflation creeping into the domestic system, the Malaysian ringgit is expected to see some upside in the days ahead although the currency’s growth has been muted recently, according to United Overseas Bank.

Since the Chinese yuan revaluation, the ringgit was allowed by Bank Negara Malaysia to strengthen 0.7 per cent, touching a maximum of 1.35 per cent on Monday while other Asian currencies grew 1.5-2.0 per cent, UOB noted.

The ringgit adjustment should help mitigate the need for interest rate changes given that a stronger currency can alleviate inflationary pressure, the bank explained.

Malaysia’s consumer price index increased 3.2 per cent year-on-year (y/y) in June 2005 - the highest in six years – due to a 30 per cent upsurge in taxi and bus fares.

It said the ringgit non-depository forwards (NDF) was currently pricing in a 2 per cent appreciation to 3.7240 over the next month and 8 per cent to 3.50 by the end of 2005.

Additionally, the Association of Banks in Malaysia also anticipated a 2 per cent rise in the currency, it added.

While stressing for an appreciation, UOB was of the view Bank Negara Malaysia was likely to hike key interest rates by 25 basis points in the next few months.

“The rationale for our call is to perhaps allow the current negative real interest rate environment between the headline CPI and 12-month ringgit fixed deposit returns to narrow as a result,” it explained.

PT Bank Buana Indonesia Tbk’s support rating has been delivered a Rating Watch Positive by Fitch Ratings pending the completion of a majority stake purchase by Singapore-based United Overseas Bank.

The imminent acquisition serves as a big plus for Buana’s operational development, especially due to the growing competition from other foreign players trying to carve into Indonesia’s banking sector, the ratings agency said. Read the rest of this entry »

Singapore’s Keppel Corp is expected to see enhanced financial results in the second half of the year due to improved capital gains, according to CIMB-GK Research

The better result is expected to come from the sale of two offshore projects, likely to yield the company a capital gain amounting to SGD$30 million while another SGD$30 million capital gain is forecast to be realised by KepLand from the sale of its stake in Parco Bugis Junction retail mall. Read the rest of this entry »