KUALA LUMPUR (Oct 5): The ringgit continues to be pressured from the US rate hike cycle but remains fundamentally undervalued over the long term, says Eastspring Investments Bhd.

"Given the economic cycle however, the currency is not expected to lower any time soon," said Eastspring chief investment officer Rudie Chan.

Chan added that Malaysia has attracted one of the highest inflows of foreign money into the market compared to its ASEAN peers, and moving forward he expects there to be an increased inflow next year.

Speaking on the regional performance, Eastspring global strategist Robert Rountree said the US rate hike will create bouts of strength in the US dollar in the short term.

"The dollar has structurally seen its top and is now going to start turning down and fall, which of course makes Asian local bonds look real attractive. As the long-term trend starts to come in, the Asian currency will reach a period where their 'cheapness' is going to start bringing the price down," he explained.

Rountree added that many low valuations remain in Asia, except for IT stocks, which therefore make it "incredibly attractive".

"Higher volatility is expected on growth in the region moving forward, though there will be more opportunities. Some are even overlooked because everyone is too focused on IT stocks," said Rountree, adding that liquidity in the region is also expected to rise though at a slower pace.

They were speaking to reporters at Eastpring's market outlook presentation event.

As at 1pm, the ringgit traded weaker against the US dollar at 4.2290, Bloomberg data showed.