Currency of Malaysia, Indonesia - outperformers in Southeast Asia in 2024: Standard Chartered
Kuala Lumpur (VNA) – Malaysian ringgit (MYR) and Indonesian rupiah (IDR) are expected to be outperformers in the Southeast Asian region in 2024 “on a relative
basis,” benefitting most from monetary policy divergences, according to
Standard Chartered.
According to
newly-released global research report of the bank, in terms of relative
performance, Indonesian rupiah and Malaysian ringgit are expected to outperform and Philippine peso (PHP) to underperform. Meanwhile, the bank is relatively neutral on Singapore
dollar (SGD), Thai baht (THB) and Vietnamese dong (VND).
Experts
from the bank believes US policy rate differentials have bottomed
out as the US Federal Reserve (Fed) has moved clearly into a pause phase.
This should help return flows in favour of
regional ASEAN currencies, the
report said.
According
to the bank, there are two factors limiting the upside. First, based on
its projections, US policy rates could remain historically high versus
ASEAN economies by the end of 2024. Second, ASEAN central banks may also cut
rates, particularly those who had hiked partly to stave off foreign exchange
(forex) weakness.
Therefore, it reckons that Malaysia, Thailand
and Vietnam’s interest rate differentials will improve, while Indonesia’s
rate differential against the US will remain similar to current levels,
while the Philippines’ rate differential versus the US dollar will
worsen in 2024.
Besides
interest rate differentials, looser US financial conditions should also aid
ASEAN forex. Standard Chartered sees Malaysian ringgit being
potentially the largest regional beneficiary on onshore US
dollar deposit positioning./.