The ringgit should start to strengthen against the US dollar from the second quarter of next year onwards and settle at the 4.40 level in the fourth quarter of 2023, Malaysian news agency Bernama reported, citing a note released by AmBank Research.
The local currency saw its weakest valuation against the US dollar on March 31, 1998, at 4.88 RM/USD, and the ringgit is expected to weaken further in the first quarter of 2023 to 4.8 against the dollar, the research house said.
AmBank Research also forecast the interest rate differential between Malaysia and the United States would narrow in the second half of 2023.
The positive impacts of the 12th Malaysia Plan, foreign direct investment, domestic direct investment, domestic activities, exports and better management of inflation and Budget 2023 should provide the necessary comfort for the economy to expand around 4.5% in 2023, it said.
Expectations are for Bank Negara Malaysia to raise another 25 basis points in November 2022 and another 25 basis points in January 2023, it said, adding that this will bring the policy rate back to the pre-COVID-19 level of 3%.
Despite a strong full-year GDP forecast of around 7.5% to 8%, AmBank said the ringgit is poised to stay weak due to the dollar play./.
Source: Vietnam News Agency