KUALA LUMPUR (Nov 4): AmBank Research said following the overnight policy rate (OPR) announcement by Bank Negara Malaysia on Thursday (Nov 3), the ringgit depreciated by 0.17% to 4.7460.

In an economics highlights note on Friday (Nov 4), AmBank Group chief economist and head of research Dr Anthony Dass said external headwinds plus domestic noises remain major drawbacks to the ringgit.

He also said that the interest rates differentials between the fed funds rate and the OPR remain wide at 100bps, favouring the US dollar.

“We project the USD/ringgit in 4Q2022 would be at 4.70 against the dollar.

“We view that another 25bps will likely take place in the next meeting in January 2023, pushing the OPR to 3%. This will bring the interest rates to the pre-pandemic level,” he said.

Meanwhile, commenting on the OPR hike, Dass said the recovery of the domestic economy will support growth, primarily from the improving labour market, investment realisation and recovery in the tourism sector.

“Downside risks to growth remain, especially coming from the external front.

“This includes tighter financial conditions in major economies, China’s insistence on the stringent Covid-19 policy which will worsen supply chain, and escalation of geopolitical conflicts,” he said.