KUALA LUMPUR, Sept. 19 (Xinhua) -- Economists have foreseen the Malaysian ringgit to strengthen further against the U.S. dollar amid rate cuts in the United States.
UOB Global Economics and Markets Research said in its recent report that it anticipates USD/MYR to resume its downward trajectory as the U.S. Federal Reserve begins its rate-cutting cycle this month, likely triggering broad-based USD weakness.
On the domestic front, the research house noted that Malaysia's economic fundamentals remain resilient, supported by steady gross domestic product (GDP) growth, ongoing foreign direct investment inflows, and a sustained -- though narrower -- current account surplus.
"Moreover, the interest rate differential between Malaysia and the U.S. is expected to narrow from 175 basis points currently to 125 basis points by end-2025 -- the smallest gap in three years -- providing additional support for the MYR," it added.
Overall, UOB's USD/MYR forecasts are 4.20 in the fourth quarter this year and 4.17 in the first quarter of next year.
Meanwhile, MBSB Research said in its recent note that it continues to forecast that the ringgit will strengthen against the USD this year, with an average exchange rate of around MYR 4.30 as compared to MYR 4.56 in 2024.
"There is still appreciation bias for ringgit, primarily driven by the expected narrowing of interest rate differentials as the U.S. Federal Reserve is projected to implement two rate cuts in the the second half while Malaysian Central Bank to maintain its overnight policy rate (OPR) at 2.75 percent," said the research house.
According to MBSB, this positive outlook is also supported by Malaysia's strong economic fundamentals, though it faces risks from potential delays in U.S. rate cuts due to persistent inflation and ongoing global uncertainties.
APEX Securities also said in a note on Thursday that it expects Malaysia's bourse to rally as the U.S. Federal Reserve easing supports foreign fund inflows, enhancing the relative attractiveness of Malaysian equities.
"These inflows should also underpin ringgit strength, aided by narrowing yield differentials and firmer regional risk sentiment," the research house added. ■
