KUALA LUMPUR (Jan 9): AmBank Group Research said the ringgit could reach 4.00 by the end of this year against the US dollar from 4.11 in the first quarter of 2020 (1Q2020).

In a thematic global markets report today, AmBank group chief economist and head of research Dr Anthony Dass said that despite external headwinds and domestic issues, the ringgit closed stronger in 2019, up 1.1% at 4.09 against the US dollar.

Dass, who is also adjunct professor in economics at University of New England, Sydney, Australia, said during the year, the ringgit traded on a wide range with a high and low of 4.06 and 4.22 respectively.

"For the full year of 2019, the ringgit averaged at 4.14 with the end period at 4.09.

"For the ringgit to strengthen against the US dollar in 2020, it will also depend on the yuan, given that these two pairs are closely correlated against the US dollar," he said.

Dass said during the year, the yuan traded on a wide range with a high and low of 6.69 and 7.18 respectively.

In 2019, the yuan averaged at 6.91 and ended the year at 6.96, he said.

Dass explained that a weaker US dollar, stronger yuan, favourable domestic macro fundamentals, firm oil prices plus benefitting positively from capital flows into this region all point to a more favourable ringgit outlook.

"Still, a play on the ringgit will be driven by several events like FTSE Russell retaining Malaysia in the World Government Bond Index during its next half-yearly review in March 2020, global rating agencies, the US Federal Reserve ending the easing rate cycle thus providing room for Bank Negara Malaysia to institute one rate in the overnight policy rate, political transition and geopolitical tension.

"The ringgit could reach 4.00 by end of the year against the US dollar from 4.11 in 1Q2020. Conservatively, the ringgit could reach 4.18 by end 2020 from 4.11 in 1Q2020," he said.