Friday 29 Mar 2024
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The impact of low oil prices on personal wealth this year is going to be positive as there will be more personal savings, according to Standard Chartered's head of macro research Edward Lee.

“We are currently having low oil prices. When we pump petrol for our cars, we actually have extra savings from there,” Lee said during a media briefing by Standard Chartered Global Research today.

Before oil prices came down last year, most individuals faced headwinds from cuts in subsidies and high inflation. But now, the inflation risk is lower.

“It is actually a positive shock and consumers are gaining from these lower prices. It does have an impact on their wealth,” he added.

Lee noted that Malaysians are under the impression that the country is a huge oil exporter, without realising it imports a lot of petroleum products. “When you to take into account the import of crude, car petrol, liquefied natural gas and palm oil, it provides an accurate picture,” he said

Standard Chartered Global Research said the ringgit is expected to weaken further against the US dollar to RM3.65 in the second quarter of this year. But it is likely to strengthen at the end of the year.

"We're looking at a trajectory with the ringgit hitting RM3.65 in the second quarter before strengthening at the end of the year to RM3.55," Lee said.

The ringgit is currently at RM3.5520 against the greenback. This compares with the firmest level over the last six months of RM3.1415 on Aug 28.

Lee said with poorer market sentiment and continued weakness of the ringgit, Malaysia's trade balance figures would be in focus, although the economy's fundamentals remained solid.

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