KUALA LUMPUR, Dec 4 (Bernama) -- MIDF Amanah Investment Bank Bhd (MIDF IB) anticipates ringgit to regain strength and to end the year stronger at RM4.30 compared to RM4.59 at the end of 2023.
MIDF IB, in a report, said this outlook is primarily driven by expectations of further policy easing from the US Federal Reserves (Fed) and the narrowing of interest rate differentials that will favour emerging market currencies, including the ringgit.
“Malaysia’s robust economic fundamentals, characterized by a persistent surplus in both the balance of trade and current account, further support this expected appreciation.
“On the same note, we expect our MIDF Trade-Weighted Ringgit Index (MIDF TWRI) will rise to around 93.0 by year-end, reflecting potential gains against other currencies,” it said.
MIDF IB, however, highlighted several downside risks that could lead to a prolonged strength of the US dollar, which includes a more hawkish stance by the Fed, possibly due to a resurgence in inflation and continued resilience in the US economy, which will hinder the ringgit’s appreciation.
“Moreover, increased demand for the dollar may arise from a flight to safety prompted by concerns over global economic growth outlook, which may be impacted by escalating geopolitical and trade tensions and a potentially weaker-than-expected growth in major economies,” it added.
-- BERNAMA
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