![]() The ringgit may keep weakening, possibly to RM4.80 against the dollar as the trade balance in April had plunged from RM23.4bil in 2022 to RM12.85bil this year, said former Inter-Pacific Securities head of research Pong Teng Siew.Īs the US Federal Reserve (Fed) had continuously raised rates in 2202, there were occasions when the Malaysian benchmark rate was kept unchanged, in view of the need to keep the domestic economy stronger.įor steadier appreciation of the ringgit, there should be more sustainable inflows from foreign direct investments and non-speculative financial flows.Ī long-term development agenda should also be implemented to accelerate Malaysia’s transition into a high income and sustainable economy. UOB expects Asian foreign exchange to fall further (the ringgit to RM4.68 against the dollar) in the third quarter (3Q23), followed by a delayed rebound in the 4Q23 as China’s economy regains momentum. Hence, the US dollar index has snapped back up, however, current dollar strength is unlikely to extend to the highs seen in late 2022, said United Overseas Bank (UOB) in a report. With the latest round of non-farm payroll figures suggesting that the US job markets is strong, there is speculation of another rate hike this or next month. ![]() The US federal funds rate (FFR) is expected to peak by the second half of the year, provided the US economy cools off more significantly than it has thus far.įor some time, there were jitters over the raising of the US debt ceiling following the signing of the bill that suspended this ceiling until 2025, the focus reverts to previous concerns on US rate hikes. It may move towards this “fair value” once the Chinese economy shows marked improvement especially in import demand, and there are strong signals that US policy rates have reached their peak. The ringgit, currently at RM4.61 to the dollar, has been undervalued even prior to the Covid-19 pandemic its real effective exchange rate or “fair value” is estimated by CIMB Group at between RM3.90 and RM4.10 against the dollar. ![]() THE drop in the ringgit against the US dollar is considered temporary, with prospects for recovery towards the second half of the year.
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