KUALA LUMPUR (May 15): AmBank Group Research said the ringgit in the near term will soften from the ongoing external headwinds and domestic challenges.

In a forex report today, its chief economist Dr Anthony Dass however said with the dollar expected to weaken, the ringgit should settle slightly strong around 4.30 levels by end 2020.

In the meantime, Dass said over the near term, the ringgit will be influenced by the ongoing external headwinds, oil price volatility, strengthening dollar as well as domestic challenges such as politics, incoming macro data, corporate earnings and the ringgit-dollar liquidity.

“On that note, with the view of a stronger dollar in the near term, the ringgit is likely to weaken,” he said.

Dass, who is also an adjunct professor in economics at the University of New England, Sydney, Australia, said the US dollar has outperformed the majority of its most liquid peers so far in 2020 as governments around the world were busy addressing the spread of Covid-19 by shutting down their economies.

He said the market sell-off led to a significant rush for safety as demand for liquidity spiked.

“Prospects of the dollar is expected to outperform its rivals, including the ringgit in the near term which is over coming weeks to around three months given that it is the most liquid safe-haven currency.

“On the longer term, the potential of the dollar strengthening will be limited, with more weakening pressure.

“This is, in part, due to the risk of a more severe and protracted global recession that has diminished. Global lockdowns and movement control order measures are slowly being relaxed,” he said.

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