KUALA LUMPUR (Jan 25): The ringgit is projected to strengthen to 4.0039 against the US dollar by the end 2019 on expectation US dollar strength may be eroded by fading US growth outperformance and a more cautious interest policy by the Federal Reserve.

OCBC Bank chief economist Selena Ling said US recession risks are higher next year and such sentiment further suggests a less hawkish Federal Reserve.

"A lot of that strength for ringgit is on the weak US dollar story, which we think is going to flatline.

"It's not much due to domestic (Malaysia) factors per se although we do see that domestically, growth slowdown has been benign and policies are fairly stable, namely no change in overnight policy rates," Ling said here today at a press conference on the economic outlook for 2019.

Today, the ringgit was traded at 4.1355 against the US dollar at 1:09pm. Over the last one year, the ringgit has strengthened to current levels after the depreciating to its weakest point against the US dollar at 4.2020.

At the press conference, Ling said OCBC forecasts Malaysia's 2019 gross domestic product (GDP) growth at a slower but stable pace of 4.4% year-on-year, underpinned by private consumption.

"We think 2019 will be challenging not so much due to the domestic issues but from the external headwinds we have been talking about," said Ling, adding that these headwinds include the impact from the US-China trade tension.