This article first appeared in The Edge Financial Daily on November 23, 2017

KUALA LUMPUR: Malaysian exporters can expect to benefit from a weak ringgit for another two years before the currency appreciates to 3.8 or 3.9 against the US dollar, said economics professor Dr Yeah Kim Leng.

Yeah, who is attached to Sunway University’s Business School, said the weak ringgit, and rising demand in  advanced economies and Asia, are the main reasons for the current 15% to 20% surge in the country’s export volume.

“Malaysian exporters are seeing a durian runtuh (windfall) season on cheap currency. So there is a window of opportunity for export-oriented  businesses to capitalise on the windfall. But the window may not [last] for long given the fact that we expect the so-called retracement of the ringgit value as the economy strengthens, underlining fundamentals,” he said.

Speaking at a seminar organised by Deloitte Malaysia, Yeah said the ringgit could strengthen by another 10%. “The question now is the timing. It is very hard to project  the exchange rate movements, but our exporters need to be ready for the point when the ringgit actually appreciates.

“From my estimates, perhaps 10% appreciation is not out of alignment, and it could go down to 3.80 or 3.90 to the [US] dollar, but the question is timing. It all depends on the strength of the underlining fundamentals, what extent [of] growth and inflation to catch up to better reflect the ringgit’s value,” he said.

Yesterday, the ringgit strengthened to 4.118 against the greenback, its highest level in 27 months since it closed at 4.1058 on Aug 19, 2015. Year to date, the ringgit has appreciated by 8.2%.

Yeah said in Malaysia, a weak ringgit has a positive impact but on a longer term, it retards technical process in the upgrading of infrastructure because much of the nation’s intermediates and capital goods are imported.

“The weak ringgit also affected consumer sentiments, but I think we are reaching a point where all factors supporting the ringgit are showing some positive recovery.”