KUALA LUMPUR, Aug. 23 (Xinhua) -- A research house has foreseen Malaysia's healthy economic fundamentals and narrowing rate differentials to drive a firmer ringgit, the local currency.
AmBank Group said in a note on Thursday that as the U.S. Federal Reserve (Fed) had already signaled the possibility of a September rate cut, the market may see the ringgit holding its ground.
Looking past recent volatility, it also believed the ringgit is poised to strengthen further to reflect Malaysia's healthy fundamentals including better-than-expected growth and solid current account surplus.
It also noted that manageable inflation and steady private consumption warrant the Malaysian Central Bank to take a neutral approach to its monetary policy, which will prevent the ringgit from weakening.
AmBank's USD/MYR projection for the third and fourth quarters stands at 4.55 and 4.53, respectively. As for 2025, the ringgit is seen to improve to 4.45 and 4.41 against the U.S. dollar in the first quarter and second quarter.
"We think it is unlikely for the currency pair to retrace back to above the 4.60 level. However, we are cautious about the pair amidst risk factors, mainly from the external front," it noted.
According to the research house, among the risk factors are heightened Middle-East geopolitical tension, which can prompt traders towards the safer U.S. dollar, and risks relating to the U.S. elections as a ramping up of protectionist or unpredictable policies would translate into a weaker ringgit. ■
