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IFA Special Report Malaysian Ringgit: Ringgit: Fate Fate depend depend on on Crude Crude Oil Oil Malaysian Analysis and Commentary: 23rd January 2015 Summary: The crude oil prices are in a downward trend since the start of July 2014. The essential commodity has plunged nearly 55% due to falling demand and glut of the oil supply. The OPEC (Organization of the petroleum Exporting Countries) has declared to keep the output unchanged even if the crude oil tumbles below $20 levels. This crude oil price war between the OPEC and US shale gas has jeopardized the finances of oil producing countries like Malaysia, Russia and Nigeria. Correlation between MYRUSD and Crude Oil The Malaysian economy, which is second largest exporter of liquefied natural gas, has been under financial distress ever since crude oil prices started tumbling. Recently the Malaysian government has revised its fiscal and growth targets as the country’s revenue has slumped drastically in last few months visa-vis fall in the global crude oil prices. The GDP growth numbers are revised by a 50 basis points cut. Despite being current account surplus economy the Malaysian central bank has been struggling to contain the sharp depreciation of Malaysian Ringgit (MYR), which tumbled nearly 15% against the US dollar in last five months. As the chart depicts the MYR is showing a strong correlation with the tumbling crude oil prices. The fall in crude oil prices has reduced the FOREX earning of the economy which in turn has affected its currency. IFA Special Report Malaysian Ringgit: Fate depend on Crude Oil Analysis and Commentary: 23rd January 2015 Globally, the modest recovery of the US economy has allowed the US Fed to completely unwind its QE program. The US dollar has gained 13.66% since July last year against the major currency pairs putting further pressure on the MYRUSD pair. USDMYR Weekly Chart In the above weekly chart of USDMYR, prices are trading in a strong primary uptrend as we are clearly observing a Higher Bottom Higher Top formation. Currently, prices are trading near the crucial resistance of 3.6090 which is the 127.6% Fibonacci Extension and the weekly RSI is in the overbought territory. As the prices are in a primary uptrend and we are not observing any signs of reversals, any dip in the pair on account of RSI being in overbought territory should be a good opportunity to buy USDMYR for target of 3.7390 which is the 161.8% Fibonacci Extension and also the previous top. Based on above factors, we expect USDMYR could correct close to levels of 3.56, as the RSI is in the overbought territory, but this dip in the pair is a good opportunity to buy, as USDMYR is trading in a strong uptrend. We expect USDMYR to go up to levels of 3.7390 where the pair has multiple resistances. IFA Special Report Malaysian Ringgit: Fate depend on Crude Oil Analysis and Commentary: 23rd January 2015 About us India Forex Advisors Pvt. Ltd is one of India's leading global Forex and treasury consulting company. We help companies explore extra-ordinary opportunities, manage and sustain growth, and maximize their revenue by minimizing the risks. Since 2005, we have been a trusted partner in Forex Consulting, Treasury Management and Forex Operational Excellence. We have always believed that every client needs a customized offering and we have a long history of serving mandate clients and tailoring the offering to their needs. We provide the right people and the right skill sets to ensure that our clients' solutions are specifically tailored and done right the first time. Disclaimer These views/ forecasts All are Interbank rates and do not include bank marginsCopyright@ INDIA FOREX ADVISORS PVT LTD. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of India Forex Advisors Pvt Ltd. These views/ forecasts/ suggestions, though proffered with the best of intentions, are based on India Forex reading of the market at the time of writing. They are subject to change without notice. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsible for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.