MIER: Ringgit to keep strong momentum against US dollar
Local currency likely to trade between 3.65 and 3.70 against US dollar by year-end
IT'S expected to strengthen to between 3.65 and 3.70 against the greenback by year end. MIER also revises upwards 2018's GDP growth projection to 5.5 per cent.
THE ringgit is expected to keep its firm momentum vis-a-vis the US dollar, trading between 3.65 and 3.70 by year-end from a low of 4.50 early last year, said a senior economist.
Malaysian Institute of Economic Research (MIER) executive director Prof Emeritus Dr Zakariah Abdul Rashid said the ringgit had performed commendably, hovering at 3.80 against the greenback in the last three months.
He said a stable ringgit would strengthen purchasing power.
“When the ringgit is stable, domestic prices of goods and services will also decrease, therefore pushing up spending power. As the ringgit further strengthens, inflation will also decrease,” he said at a media briefing, here, yesterday.
MIER expects inflation to stabilise at three per cent this year before rising marginally to 3.2 per cent next year.
Headline inflation was 2.7 per cent in January and 1.4 per cent in February, the slowest rate of growth since October 2016.
Zakariah said despite the price of crude oil exceeding US$60 (RM233) a barrel, the exchange rate (ringgit against the US dollar) had strengthened more than the increase in crude oil price, hence, keeping inflation moderate.
MIER also revised upwards its real gross domestic product growth projection for Malaysia this year to 5.5 per cent from 5.4 per cent previously, driven by domestic demand.
“The economy will continue to be domestically driven and private consumption will remain the engine of growth.
“We can still rely on consumer spending to drive the economy, with imports and exports remaining promising even though we experienced absolute trade reduction in February,” said Zakariah.
Imports and exports declined in February partly due to the base effect, he said.
However, the country was still able to post a hefty trade surplus of RM9 billion, a 3.3 per cent year-on-year growth from the same period of last year.