KUALA LUMPUR, July 2 (Xinhua) -- Economists have forecast the Malaysian ringgit will gradually appreciate by the end of this year amid improved economic fundamentals.
BMI Country Risk and Industry Research said in a note on Monday that it retained its 2024 forecast that the Malaysian ringgit will appreciate later this year, rising from MYR4.70/USD currently to MYR4.55/USD by end-2024, implying that the ringgit will likely appreciate more substantially in the fourth quarter.
"Over the medium term, we hold a positive view on the ringgit as narrowing interest rate differentials with the U.S. and a relatively strong growth outlook should remain supportive of the currency," the Fitch Solutions unit said.
The ringgit has been on a broad weakening trend since the start of 2024 and touched multi-year support of MYR 4.80/USD on April 16.
While it has since regained some lost ground, the unit is down 2.5 percent against the U.S. dollar year-to-date, ranking it among the better-performing currencies in Asia.
Meanwhile, MIDF Research also said in a note on Tuesday that it anticipated the ringgit to appreciate especially in the latter part of the second half this year, and to close the year stronger at approximately MYR4.43/USD, as compared to MYR4.59/USD in end-2023.
According to the research house, the influx of foreign funds into emerging markets, particularly in light of the anticipated reduction of the U.S. Fed's federal funds rate, is expected to benefit regional currencies and the ringgit.
MIDF Research also said the expected recovery in Malaysia's external trade and an optimistic economic outlook are poised to bolster the ringgit's performance this year.
In addition, it said elevated commodity prices would also drive increased demand for the ringgit.
"Furthermore, the ringgit will likely benefit from anticipated policy easing by major central banks; vis-a-vis Malaysian Central Bank is expected to maintain the overnight policy rate at 3 percent this year," it added. ■
