Wednesday, April 12, 2006

The future of interest rate

With crude oil prices soaring high, the general view is that BNM will raise the interest rate by another 25 basis points, perhaps by this April 25th when they meet to review the monetary policy. The fear of rate hikes have been gradually weakening MYR govt bonds eversince BNM raise overnight policy rate to 3 percent. Looking at the current interest rate swap levels, I am anticipating Malaysian interest rate to hit at least 3.75 percent by end of this year, maybe 4 if the Iran standoff is not solved immediately (Iran being OPEC's 2nd largest producer). The 1 year interest rate swap level has risen approximately 29 percent since August 15th and it is currently standing at 3.966 percent. I seriously think its time to move funds away from bonds, according to sources, Malaysia's 5 year bonds opened lower today before auction. Time to concentrate on equity? I think its about time KLCI gets a push to set its direction right, UP!. Will the coexistence of these two markets facilitate the mean reversion theory? More to come...gotta work


Post a Comment

Subscribe to Post Comments [Atom]

<< Home