Friday 29 Mar 2024
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KUALA LUMPUR (June 9): Hong Leong IB Research expects the weak ringgit to to have slight positive impact on the economy due to gain in forex translation and export competitiveness.

In a note today, the research house said the Malaysian ringgit hit a new low of RM3.77/US$ yesterday.

It said that from a macro perspective, a combination of short-term factors would continue to put pressure on ringgit: (i) divergence in monetary policy stance among major economies; (ii) exposure to commodities; (iii) potential Fitch downgrade; and (iv) other domestic issues (ie 1MDB and political glitches).

“In the short-term, we believe the ringgit is likely to remain under pressure as we expect the factors listed above remain unchanged and unresolved.

“As ringgit is more sentimentally driven amid volatility in the global financial market, we widen our ringgit forecast range to RM3.55-4.00/US$ (previously: RM3.55-3.70/US$), with full-year mid-point average forecast of RM3.70/US$ (previously: RM3.50/US$).

“We expect weak ringgit to have slight positive impact on the economy due to gain in forex translation and export competitiveness. Over time, we believe the ringgit would re-adjust to its fundamental value once domestic issues are resolved,” it said.

 

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