KL CHRONICLE: World Bank: External factors to drive ringgit's movement, not #1MDB

Monday, January 16, 2017

World Bank: External factors to drive ringgit's movement, not #1MDB

The ringgit's movement will likely be driven by external developments and global perspectives, says the World Bank.

Senior economist Rafael Munoz Moreno said factors likely to move the ringgit were the change in the US fiscal policy and the level of transparency in its monetary policy.

"This will translate into the (performance of) global financial markets (including the Malaysian market)," he told reporters at a two-day World Bank conference on 'Enhancing the Quality of Service Delivery', in Kuala Lumpur on Monday.

He maintained that the ringgit was still strong as the country was financially integrated compared with other countries in the region.

Munoz pointed out that the ringgit's movement, going forward, would also reflect commodity prices.

"Being a major commodity producing country, any increase in commodity prices will favour the ringgit," he said.

Recently, the World Bank forecast that Malaysia's economy would grow by 4.3% this year and expand further by 4.5% in 2018 as adjustments to lower energy prices ease and commodity prices stabilise.

This signals a moderate expansion from a low of 4.2%, expected in 2016, said the World Bank, adding that growth among commodity exporting economies in the region were forecast to accelerate.

Besides Malaysia, neighbouring Indonesia, which is also a commodity producing country, was expected to see its economy picking up by 5.3% this year from 5.1% in 2016.

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