Economists see Malaysian ringgit to remain in recovery path-Xinhua

Economists see Malaysian ringgit to remain in recovery path

Source: Xinhua| 2024-04-02 18:34:15|Editor: huaxia

KUALA LUMPUR, April 2 (Xinhua) -- Economists have projected Malaysian ringgit to stay in recovery in 2024 amid weakening U.S. dollars (USD).

MIDF Research said in its recent report that the ringgit is on track to appreciate in 2024. "External trade has indicated improvement and is set to rebound in 2024 while domestic demand conditions remain positive."

Commodity prices are also in favor of the ringgit appreciating as crude petroleum and crude palm oil prices broadly ascend in the two months of 2024, it said.

With the domestic economy maintaining its positive momentum, and status as a net exporter of commodities such as crude petroleum, liquefied natural gas, and palm oil, it said the ringgit is poised to benefit from favorable global commodity prices and a continued trade surplus.

"The Federal Reserve is expected to cut the interest rate in mid-2024 at the earliest, while Bank Negara Malaysia is expected to hold the rate steady in 2024. Hence, we foresee USDMYR to average at RM4.38 and reach RM4.20 by year-end 2024," it said

It is noted that the USD has been broadly strengthening in the first two months of 2024 which saw the ringgit slipping to a 26-year low of RM4.80 on Feb. 20, 2024.

Meanwhile, UOB Global Economics and Markets Research also said in its recent report that the ringgit is expected to stay weak in the first quarter before stabilizing and rebounding in the subsequent quarters.

"This is backed by expectations for the dollar to weaken anew in the second quarter ahead of the first Fed rate cut in Jun while China's economy continues to stabilize towards the end of the year," said the research house.

A steady overnight policy rate will also help to narrow the negative gap with U.S. interest rates and support the ringgit recovery by year-end, it added.

Hong Leong Investment Bank Research, on the other hand, said in a recent note that with resurfacing "further and fewer" sentiment on the Fed Funds Rate (FFR), its ringgit recovery thesis may be delayed, but not derailed.

Given peak FFR, the research house expects USD strength to eventually subside (likely around mid-year), which should augur well for the ringgit.

"Timeline wise, we now envision ringgit to remain weak in the near term before resuming its appreciation path in the second half of 2024 to end the year at 4.45 USD-MYR," it said.