Buy ringgit against Singapore dollar: ANZ

Investors should buy the ringgit against the Singapore dollar because higher commodity prices will spur Malaysia’s economic recovery over the next six months, according to Australia & New Zealand Banking Group Ltd.

The ringgit may advance 2 per cent to 2.40 per Singapore dollar by the end of the first quarter of 2010 as increases in the prices of crude oil, palm oil and rubber will help Malaysia’s economy expand at a faster pace than its southern neighbour, strategist Yeo Han Sia said in a research note today.

“We expect the base effect in commodity prices to narrow the export gap in Malaysia’s favour, having knock-on effects for portfolio flows and the currency cross rate,” wrote Yeo, who is based in Singapore.