Singapore dollar hits all-time high against Malaysian ringgit
By Tang See Kit Posted 24 Feb 2017 16:57 Updated 24 Feb 2017 17:23
A money changer counts Malaysian ringgit bank notes while customers wait at a foreign exchange booth. (AFP/TENGKU BAHAR)
SINGAPORE: The Singapore dollar hovered at an all-time high against the Malaysian ringgit on Friday (Feb 24), peaking at 3.1687 earlier in the day before easing back to 3.1643 in afternoon trade.
An outperformance of the Singapore currency, rather than a weakening in the ringgit, was behind the movements in the SGD/MYR, analysts told Channel NewsAsia.
Alongside broad-based strength in other Asian currencies such as the South Korean won and the Taiwan dollar, the Sing dollar edged up as overnight comments from US Treasury Secretary Steven Mnuchin pulled down the US dollar.
Speaking to CNBC in his first televised interview since taking office, Mnuchin said he wanted to see tax reform passed before Congress' August recess, but later acknowledged on Fox Business Network that such a timeline was "very aggressive”. US president Donald Trump previously said he would announce a "phenomenal" plan by early March to cut business taxes.
“Overnight comments from Mnuchin seem to suggest that the tax reforms will only be read in August. If that’s the case, dollar strength will only come later,” said Mr Christopher Wong, senior FX strategist for Maybank.
“Even on Trump’s point of declaring China as a currency manipulator, Mnuchin said there’s no plan to do that so there seems to be a contradiction in there,” Mr Wong added. “This sets the stage for Trump’s first address to a joint session of Congress on Feb 28, which markets will be keeping an eye on for more details of his tax reform and infrastructure plans.”
Little clarity on the US president’s proposed fiscal stimulus has reined in the US dollar's rally since the start of the year, allowing Asian currencies to take a slight breather.
On Friday, even a below-par industrial production report failed to dampen the spirits of the Sing dollar, which was last seen at 1.4050 per US dollar in afternoon trade. Earlier in the day, the local dollar hit 1.4091 against the greenback, its highest since Nov 10.
“The outperformance of the Sing dollar occurred way before the data release but even that had little impact. Simply because the big swing this month in industrial production was due to the biomedical manufacturing, which is typically quite volatile,” Mr Wong said.
Amid expectations of further bouts of US dollar weakness, analysts expect the Sing dollar to continue outperforming.
“The narrative surrounding Trump and his agenda is fraying and that’s causing these movements. With a little bit of recovery in risk sentiment given the push back in moves that could inflate trade tensions, we see low-yielding currencies like the Sing dollar doing better,” said Mr Julian Wee, senior markets strategist for Asia at National Australia Bank.
On the other hand, the Malaysian ringgit will likely continue to underperform most of its Asian counterparts.
One reason for that is Bank Negara Malaysia’s (BNM) lack of adequate foreign exchange reserves to “smooth out the depreciation” of the currency amid a strong dollar environment, Mr Wee noted.
- CNA/sk
- wong chee tat :)
In the third air incident connected to Malaysia this year, an AirAsia plane with 162 people on board disappeared Sunday while flying over the Java Sea after taking off from a provincial city in Indonesia for Singapore.
The two countries immediately launched a search and rescue operation for Flight QZ8501, but there was no sign of the plane more than seven hours after it lost contact with ground control.
- Read AirAsia's full statement on Flight QZ8501
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AirAsia, a regional low-cost carrier founded in 2001 by Malaysian businessman Tony Fernandes, said in a statement that the missing Airbus A320-200 was on the submitted flight plan route. However, it had requested deviation due to weather before communication with the aircraft was lost while it was still under the control of the Indonesian Air Traffic Control.
AirAsia, which has a presence in most of Southeast Asia and recently in India, has never lost a plane before and has a good safety track record.
"We don't dare to presume what has happened except that it has lost contact," Djoko Murjatmodjo, Indonesia's acting director general of transportation, told reporters. He said the last communication between the pilot and air traffic control was at 6:13 a.m. when the pilot "asked to avoid clouds by turning left and going higher to 34,000 feet (10,360 metres)."
He said there was no distress signal from the cockpit.
Relatives of the passengers of AirAsia flight QZ8501 comfort each other at Juanda International Airport in Surabaya, Indonesia, Sunday, Dec. 28, 2014. (Trisnadi/Associated Press)
The contact was lost about 42 minutes after the single-aisle, twin-engine jetliner took off from Surabaya airport, Hadi Mustofa, an official of the transportation ministry, told Indonesia's MetroTV. It was about an hour before it was scheduled to land in Singapore.
The plane had an Indonesian captain and a French co-pilot, five cabin crew and 155 passengers, including 16 children and one infant, AirAsia Indonesia said in a statement. Among the passengers were three South Koreans and one each from Singapore, Malaysia. The rest were Indonesians.
It said the captain in command had a total of 6,100 flying hours, a substantial number, and the first officer a total of 2,275 flying hours.
Rescue effort ongoing
At Surabaya airport, dozens of relatives sat in a room, many of them talking on mobile phones and crying. Some looked dazed. As word spread, more and more family members were arriving at the crisis centre to await word.
Murjatmodjo, the Indonesian official, said the plane is believed to have gone missing somewhere over the Java Sea between Tanjung Pandan on Belitung island and Pontianak, on Indonesia's part of Borneo island.
Family members of passengers on AirAsia Flight QZ8501 search a list of names as they await news of their loves ones at Juanda Airport in Indonesia. (Suryanto/Antara Foto/Reuters)
Transport Minister Ignasius Jonan told reporters in Surabaya that the position was believed to be near the coast line. He said search and rescue efforts now involved the Indonesian army, the national Search and Rescue Agency as well as Singapore and Malaysia. But that effort will focus on the area around Belitung island.
Air Force spokesman Hadi Tjahjanto said three aircraft, including a surveillance plane, had been dispatched to the area. The Singapore air force and the navy also were searching with two C-130 planes.
Flightradar24, a flight tracking website, said the plane was delivered in September 2008, which would make it six years old. It is not clear if it has any satellite tracking devices on board.
'We have to reserve judgment'
Malaysia-based AirAsia, which has dominated cheap travel in the region for years, flies short routes of just a few hours, connecting large cities of Southeast Asia. However, recently it has tried to expand into long-distance flying through its sister airline AirAsia X. AirAsia Malaysia owns 49 per cent of its subsidiary, AirAsia Indonesia.
Fernandes, who is the face of AirAsia and an active Twitter user, sent out a tweet saying: "Thank you for all your thoughts and prays. We must stay strong." He tweeted later that he was heading to Surabaya.
A Changi Airport employee in Singapore holds up a sign to direct possible relatives of passengers of AirAsia Flight QZ8501. (Edgar Su/Reuters)
Fernandes stirred controversy earlier this year after incorrectly tweeting that Malaysia Airlines flight 370, now synonymous with one of aviation's enduring mysteries, had landed safely. The wide-bodied Boeing 777went missing soon after taking off from Kuala Lumpur for Beijing on March 8. It remains missing until this day with 239 people.
Another Malaysia Airlines flight, also a Boeing 777, was shot down over rebel-controlled eastern Ukraine while on a flight from Amsterdam to Kuala Lumpur on July 17. A total of 298 people on board were killed.
William Waldock, an expert on air crash search and rescue with Embry-Riddle Aeronautical University in Prescott, Arizona, cautioned against drawing comparisons to the disappearance of Malaysia flight 370.
"I think we have to let this play out," he said. "Hopefully, the airplane will get found, and if that happens it will probably be in the next few hours. Until then, we have to reserve judgment."
The circumstances bode well for finding the plane since the intended flight time was less than two hours and there is a known position at which the plane disappeared, he said.
Aircraft has strong safety record
Malaysian Prime Minister Najib Razak, expressed solidarity with AirAsia. In a tweet he said: "Very sad to hear that AirAsia Indonesia QZ8501 is missing. My thoughts are with the families. Malaysia stands ready to help."
President Barack Obama, who was vacationing in Hawaii, was briefed Sunday evening on the plane's disappearance, and White House officials were tracking the situation, the White House said.
- INTERACTIVE | Planes that went missing without a trace
The Airbus A320 is a workhorse of modern aviation. Similar to the Boeing 737, it is used to connect cities anywhere from one to five hours apart. There are currently 3,606 A320s in operation worldwide, according to Airbus. The A320 family of jets, which includes A319 and A321, has a very good safety record, with just 0.14 fatal accidents per million takeoffs, according to a safety study published by Boeing in August.
It's too early to say what might have caused a crash, but the safest part of a trip is when a plane is flying at its cruising elevation. Just 10 per cent of fatal crashes from 2004 through 2013 occurred while a plane was in that stage of flight, according to the August Boeing safety report.
Passing through bad weather, such as severe thunderstorms, could have been a factor. Airbus jets are very sophisticated and are able to automatically adjust to wind sheers or other weather disruptions. However, weather has played a role in past air disasters that occurred at cruise elevation, including the 2009 Air France Flight 447 crash over the Atlantic Ocean.
Another possibility is some type of catastrophic metal fatigue caused by the cycle of pressurization and depressurization associated with each takeoff and landing cycle - something that flight 8501 would have done a lot. Still, metal fatigue is unlikely because this plane is only six years old.
- wong chee tat :)