KUALA LUMPUR (Aug 1): Singapore-based DBS Bank Ltd’s research house expects the ringgit to strengthen to 4.22 against the US dollar in the third and fourth quarters of this year.

The projection by DBS is higher than the consensus estimates tracked by Bloomberg, which forecast the ringgit to average at 4.29 in 3Q17 and 4.27 in 4Q17.

The ringgit fell to 4.2560 on June14, its weakest close for the year, noted DBS in its mid-quarter foreign exchange update released today. At this level, it said the Malaysian currency had appreciated 5.4% year-to-date (YTD) against the greenback. Since then, the ringgit has been stable in a 4.25-4.3 range.

DBS research house noted that the ringgit ended 2016 at RM4.4862.

“So far, 2017 had been a good year for the Malaysian economy and its markets. Real GDP (gross domestic product) growth expanded 5.6% year-on-year in 1Q17, above 5% for the first time since 1Q15,” DBS said.

“Trade growth rebounded to levels not seen since the V-shaped recovery from the global financial crisis,” it added.

As for the country’s foreign reserves, DBS said that after four years of declines, they rose to US$99.1 billion on July 17 from US$94.6 billion at end-2016.

“Similarly, Malaysian stocks ended three years of scandal-led weakness and rallied in 2017. At its strongest close on June 14, which was a level not seen since May 2015, the FTSE Bursa Kuala Lumpur Composite Index rose 9.2% YTD,” it added.

Against this favourable background, DBS noted that the government may bring forward the 14th general election, which is due by August 2018, to this year.

“If so, most expect this to take place in the final quarter. Investors expect the financial markets to perform well during this period,” said DBS.

DBS said that with the exception of the Hong Kong dollar and the Philippine peso, 2017 has been a favourable or at least stable year for Asian currencies so far.