Ringgit may fall 4.6 %

THE Malaysian ringgit may fall as much as 4.6 per cent after the opposition coalition won two out of three regional elections, according to ING Groep NV. Declining foreign-exchange reserves and a likely drop in the Singapore dollar will further pressure the ringgit to weaken, ING said.

The ringgit sank 1 per cent to 3.6295 against the dollar as of 12:20 pm in Kuala Lumpur, according to data compiled by Bloomberg. It has lost 4.2 per cent so far this year.
The currency may tumble to 3.80, a level at which it was pegged to the dollar until July 2005, before Bank Negara Malaysia steps in to stem losses. Central banks influence exchange rates by arranging sales or purchases of currencies. A central bank report yesterday showed gold and foreign- exchange reserves fell 3.1 per cent in the two weeks ended March 31, the biggest drop this year. The nation’s total foreign- exchange reserves slid to US$88 billion on March 31, from as high as US$125 billion on June 30.

The Monetary Authority of Singapore may devalue the city’s currency and allow it to drop 4 per cent against the US dollar by June 30 to lift the economy out of its worst recession since independence in 1965, a Bloomberg survey showed on March 30.“If now is not the time for Singapore to adopt a clearly accommodative monetary policy, then we don’t know when is,” wrote Sean Callow, a Sydney-based currency strategist at Westpac Banking Corp, Australia’s largest lender by market value. Singapore’s dollar may fall to S$1.54 against the greenback “in the days following the review” on April 14, Callow said in the note. - Bloomberg