Ringgit is expected to reach RM3.80 this year

by TMR

The ringgit could appreciate to RM3.80 by year-end as global growth, higher private consumption and a supportive onshore foreign exchange market offset near-term volatility, according to United Overseas Bank (Malaysia) Bhd.

Its economist Julia Goh said the local note is less susceptible to volatility when compared to other regional currencies due to the domestic support.

“Supportive global growth conditions, higher domestic private consumption levels and private investment spending, coupled with an orderly forex onshore market, puts the ringgit on a strong footing,” Goh said in a statement today.

“As such, we maintain our projection for the ringgit to strengthen further to RM3.80 against the US dollar by year-end.”

She said the local unit remains undervalued with its fair value sitting somewhere between RM3.60 and RM3.70, with market uncertainties currently holding back investors.

This includes growing trade tensions between the US and China due to the possible implementation of trade tariffs and the Malaysian general elections to be held this year, she said.

“While we do not expect global trade to fall significantly at this juncture, global trade relations deteriorating dramatically could result in a stronger US dollar as investors move to safe haven assets.”

She said this may cause regional currencies to weaken against the greenback in the near term.