KUALA LUMPUR, July 21 — The ringgit, which has been on the downtrend against the greenback lately as a result of solid US economic growth, is expected to stabilise and become stronger by year end.
Affin Hwang Capital Chief Economist Alan Tan said the ringgit was expected to appreciate to RM3.80 versus the US dollar given the country’s strong economic fundamentals and trading activities.
“We think the economic fundamentals will support the ringgit towards the end of 2018. While we think the currency will remain volatile in the short term, it will strengthen in the fourth quarter and rise towards the 3.80 level by end of this year,” he told reporters after a Business Outlook Post-GE14 forum organised by Affin Bank SME and Commercial Business in collaboration with the Malaysia-China Chamber of Commerce here today.
Tan said Bank Negara Malaysia’s (BNM) measures to stabilise the ringgit such as the conversion of 75 per cent of export proceeds held in a foreign currency into the local unit would also help boost the value of the currency as well as monetary inflows into the country.
“The economic fundamentals as well as BNM’s requirement (announced in December 2016) for exporters to convert their proceeds, will create demand and support for the ringgit,” he added.
Yesterday, the ringgit ended higher against the US dollar on renewed buying interest.
At 6pm yesterday, the ringgit stood at 4.0600/0630 against the US dollar from 4.0620/0650 on Thursday.
Asked about the China-US trade dispute, Tan expressed confidence it would not escalate into a global trade war.
“At the moment, our assumption is it will not escalate into a global trade war. We think it is highly likely that there will be a compromise between the US and China,” he added. — Bernama