At 9.03 am(0103gmt), the local note stood at 4.2930/2970 against the greenback compared with Tuesday's close of 4.2960/2990.
KUALA LUMPUR: BMI Research maintained its positive outlook on the ringgit, with the currency showing signs of consolidation following a break of resistance.
Over the longer term, the research house expects the currency to appreciate as it remains supported by a stabilising political outlook, an improving fiscal position, and still-undervalued real effective exchange rate.
The research house, which is a unit of Fitch Group, noted that the ringgit has strengthened by 9.3% year-on-year since January and was showing signs of consolidation following the break of trendline resistance at RM4.32 against the US dollar.
“We have long highlighted that default risk in Malaysia is extremely low and that the political situation would stabilise despite the need for general elections to be held by August 2018.
“The decline in Malaysia’s five-year credit default swap (CDS) suggests that perceptions of default risk have continued to decline.
“Given the strong correlation between the ringgit and CDS spreads, this should support the ringgit in the near term, with the CDS spread having reached multi-year lows,” it said on Tuesday.
In the long-term, the research house expects the ringgit to remain on a broad appreciatory trend, averaging RM4.25 against the US dollar in 2017 and RM4.15 against the US dollar in 2018.
It said this was based on expectation of an improving fiscal outlook, stabilising political situation, and undervalued exchange rate to be supportive of the currency.
It also upgraded its end-2017 forecast to RM4.05 from RM4.20 against the US dollar previously and end-2018 forecast to RM4.00 from RM4.10 to reflect the ringgit’s stronger than expected appreciation so far this year.
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