Ringgit likely to strengthen by 5% against US dollar by year-end, says UBS

KUALA LUMPUR: The ringgit is expected to appreciate by five per cent against the US dollar by year-end as the greenback is now in a stabilisation mode, says UBS Investment Bank's senior global economist/managing director, Paul Donovan. 

"The ringgit is biased to strengthen in the range of five per cent ... along this line and nothing too dramatic.

However, we must also accept the fact that the currency (will continue to be) more volatile," he told reporters at the media roundtable session here today.

However, he said, the ringgit against the US dollar exchange was not the best indicator to measure the weaknesses and the strengths of the former.

"We have to see how the ringgit has been performing against the regional currencies as well," he said.
Donovan also said the global oil prices, which had impacted the ringgit, were expected to recover in the fourth quarter of this year and they would continuously rise year-on-year.

On the country's current account, he said, if the oil prices remained low, they might lead to current account deficit as the current low dividend paid to government this year was likely to be sustained until next year.

"The oil prices will slowly go back to US$80 from around US$50 in three years' time and (on the current account deficit), I am not alarmed by this, but I think it is a situation that needs to be monitored and it is a reflection of global economic environment," he said.-Bernama