Malaysia University of Science and Technology school of business dean Dr Yeah Kim Leng
PETALING JAYA: There ringgit could hover between RM3.80 and RM3.90 level against the greenback this year, said Sunway University Business School economics Prof Dr Yeah Kim Leng.
Hr told StarBiz that assuming that the US-China tariff retaliations are contained, a year-end RM3.80-RM3.90 will be a comfortable level to underpin Malaysia’s sustained growth amid lower inflation this year.
“It could dip below the psychological RM3.80 level, especially after the general elections when political uncertainties clear up and Malaysia’s growth prospects and export momentum remain intact while the US dollar continues to be weighed down by twin deficit concerns amid more a gradual than expected Fed moves on interest rate normalisation and subdued inflation in the US.
“If the ongoing trade spat results in higher inflation but not affecting growth in the US, then the Fed could tighten more aggressively and this may lead to a stronger dollar.
“Lower imports from China or higher US exports could also help to narrow the US current account deficit which will be dollar positive besides relieving Trump’s pent-up trade tension,’’ he added.
However, he said if the dollar tanks because of rising inflation and accommodative stance of the US Fed, to spur exports, ringgit will again outperform or at least maintain the appreciation trajectory given that it is still about 10% undervalued based on a trade-weighted currency basket.
Meanwhile, AmBank Group Research chief economist Anthony Dass said he expected the ringgit to hover around 3.800 -3.8300 with the room for it to reach 3.760 by year-end.
He forecasts the US$/ringgit to be on an appreciation mode for 2018 and 2019 due to the stronger economic growth which is expected to broaden across the sectors amid some volatility.
Dass expect the ringgit to continue maintaining its strengthening mode in 2019 and believes the currency should reach around 3.650 by end-2019.
UOB senior economist Julia Goh was reported as saying that she was maintaining her year-end US dollar-ringgit exchange rate forecast at 3.8000 and expect investment flow to pick up post-Malaysia’s general election, further supporting the ringgit’s strength.
At 5pm, the ringgit further gained ground by 0.14% against the US dollar to trade at RM3.87.
