Ringgit, the major currency of Malaysia has experienced its biggest rally since 2010 and the stocks rose to a record high as well. The Prime Minister of the Asian country, Najib Razak won a clear majority in the election and therefore, it has given him the required mandate to continue with all the planned economic reforms.
The currency experienced a jump of 1.8% and it is currently priced at 2.9793 per USD, recording the biggest surge since June, 2010. At one point of time, it reached 2.9625, the strongest value since 2nd September, 2011. On the other hand, the benchmark stock gauge of Malaysia, the FTSE Bursa Malaysia KLCI Index experienced an increase of 3.4% and it is currently at an all-time high of 1,752.02 at time of close. This is the best performance of the index since November, 2008. Earlier, it went ahead by 7.8%.
Barisan Nasional, the ruling coalition which is also known as the National Front won 133 of the total 222 parliamentary seats. On the other hand, the opposition led by Anwar Ibrahim got 89 seats. The data was released by the Election Commission. Najib has embarked on a development program worth $444 billion and it includes building railways, roads and power plants for helping Malaysia to gain developed nation status by end of 2020.
According to the Currency Strategist of Bank of America Corp., Christy Tan, market is currently focused on the reduction in the political risk premium and the reaction is possibly bordering on euphoria. Tan added that the Central Bank may come in and play a part in restraining this momentum.
On today, Ringgit has marked the biggest rally if all the emerging market currencies are considered. According to Tan, it may actually strengthen by 1.3% more to 2.94 per USD by end of September. On the other hand, in a separate research note, Goldman Sachs Group has stated that Ringgit should advance to 2.95 per USD in the next 6 months and 2.9 per USD in the next 1 year.
According to a state television broadcast, Najib has already been sworn in by the King. On the other hand, Anwar is yet to concede defeat and many reports suggest that he is planning to contest some results after highlighting the electoral irregularities. Economists feel that with Najib’s victory, the entire economic growth should be positive.