Friday, 10 December 2010

Ringgit a favorite pick of Morgan Stanley

Ringgit a favorite pick of Morgan Stanley
Published: 2010/12/10

Malaysian ringgit and Singapore dollar are likely to outperform among Asian currencies next year, say Morgan Stanley strategists in research note.

They added that one of their top 2011 FX trade ideas is long MYR/JPY with target of Y29.0, about 8.6 per cent above current level near Y26.70.

“SGD and MYR are our favourite picks in Asia, as both are great reflation trades ... and both have hawkish central banks, strong economic fundamentals and very healthy balance of payments positions.”

Morgan Stanley economists see growth in Asia ex-Japan reaching 8.2 per cent in 2011, slowing only moderately from 9.5 per cent expected for 2010.

Another plus for MYR is potential benefits from rising commodity prices, since Malaysia is the only net commodity exporter in the region, say the strategists, who think INR, THB and IDR look overvalued and may lag in 2011 among Asian currencies.

Risks to Asian currencies include global “risk-off” events, potential for lagged policy responses to regional inflation and risk of more capital controls, they add. -- Reuters

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