‘RINGGIT AT 4.00 LEVEL BY YEAR-END’
Forex reserves, dovish Fed stance lending support, says RHB
THE ringgit may advance gradually to breach the psychological level of 4.00 against the US dollar again and continue its strengthening path to 3.80 by the year-end, according to RHB Research.
Malaysia’s higher foreign exchange (forex) reserves and the dovish US Federal Reserve (Fed) tone are lending support to the domestic currency.
Malaysia’s forex reserves rose US$700 million (RM2.85 billion) to US$102.1 billion as at January 31 this year, after falling to US$600 million in December last year.
“The ringgit is expected to continue its strengthening path to 3.80 versus the US dollar by the end of 2019, also due to the dollar’s weakness on expectations that the US Fed may pause its rate hike stance following signs of slowing US economic growth,” said the research house in a note yesterday.
Citing figures from Bank Negara Malaysia, it said the rising forex reserves was likely driven by the continued accumulation of surplus in the current account, while portfolio investments experienced reduced fund outflows, supported by net inflows into the equity market.
It noted forex reserves also likely climbed this month due to current account gains and reduced portfolio outflows.
The ringgit gained 0.8 per cent versus the US dollar to 4.0770 in the first week of this month, following the 0.7 per cent gain last month.
At the close yesterday, the ringgit climbed to its six-month high of 4.0650/0690 against the US dollar, from 4.0770/0800 recorded on Tuesday.