CREDIT SUISSE SEES STRONGER RINGGIT VERSUS US DOLLAR
Credit Suisse has revised its forecast for the ringgit versus the US dollar to 4.45 from 4.50, saying foreign exchange (forex) flow pressures seem more balanced now.
The pair will be relatively stable around the current level and the outlook may turn positive for the ringgit towards next month.
Credit Suisse said net forex inflows from trade had risen, while foreign selling of bonds had eased. “A seasonal rise in dividend repatriation around April could turn the balance towards net inflows. However, we think appreciation pressure may be met by a rise in central bank intervention,” it said.
The ringgit was quoted at 4.4542 against the US dollar yesterday from Thursday’s 4.4500.
The research house has maintained its 12-month forecast for ringgit at 4.55.
It expects a potential expansion of the United States fiscal deficit to drive dollar strength later this year.
Exports and Malaysia’s terms of trade have improved, and Bank Negara Malaysia’s new rules require higher rates of conversion of forex proceeds into ringgit.
“Export conversion into ringgit exceeded imports by US$0.37 billion in December and US$0.74 billion in January. These are still small relative to overall monthly trade surplus of about US$2 billion, but will likely rise further in the coming months, as the full effect of the new policy kicks in,” said the firm.
The ringgit was quoted at 4.4542 against the US dollar at the close yesterday from Thursday’s 4.4500.