Ringgit to hit 3.8 vs US dollar by end-year

KUALA LUMPUR: The ringgit may gradually advance to breach the psychological level of 4.0 against the US dollar again, and continue its strengthening path to 3.80 by end-2019, according to RHB Research.

Malaysia’s heightened forex reserves and the dovish tone set by the US Federal Reserve (Fed) are lending support to the domestic unit.

Malaysia’s forex reserves rose US$700 million to US$102.1 billion as at Jan 31, after falling US$600 million in Dec 2018.

“The ringgit is expected to continue its strengthening path to 3.80 versus the US dollar by end-2019, also due to the dollar’s weakness on expectations that the US Fed may pause its rate hike stance following signs of slowing US economic growth,” the research house said in a note today.

Citing figures from Bank Negara Malaysia, it said the rising forex reserves were likely driven by the continued accumulation of surplus in the current account, while portfolio investments experienced reduced fund outflows, supported by net inflows into the equity market during the period.

It noted that forex reserves also likely climbed this month due to current account gains and reduced portfolio outflows

The ringgit gained 0.8% versus the US dollar to 4.0770 in the first week of February, following up on the 0.7% in gain in January.

It opened higher at 9am this morning at 4.0650/0700 against the greenback from 4.0770/0800 at 6pm yesterday.