The Malaysian central bank kept its benchmark interest rate unchanged for the 3rd straight meeting yesterday to help bolster its currency. Its hoping that its key rate at 3% is enough to withstand future tightening of US monetary policy. The FED has been voicing its intention to increase its low interest rates a few times from this year till 2019. This action would see hinder further policy easing for Asia.
For now the Ringgit has stabilise but I suspect any uncertainties in the global economy, the policy environment and geopolitical developments may, would result in bouts of volatility in the regional financial and foreign exchange markets. These are times which investors should prepare to protect their currency against the depreciation via gold or other investments which returns are higher than the Ringgit depreciation.
Meanwhile the Malaysian economy is projected by the government to grow 4 percent to 5 percent in 2017, while inflation is forecast to average between 2 percent and 3 percent this year. Consumer prices rose 1.8 percent in December from a year ago. Inflation should be higher than the 2.1% recorded last year and recovery is on track so far.