KUALA LUMPUR, May 29 (Xinhua) -- Malaysian ringgit, which has risen to a six-month high of 4.27 against the U.S. dollar last week, may continue to hold up well throughout the year and revisit the level of 4.10.
According to economists contacted by Xinhua, the main drivers for ringgit in the second half include the improvement of Malaysian economic fundamentals, the implementation of foreign exchange measures by the Malaysian central bank, firmer oil prices and gradual rate hikes by the Federal Reserve of the United States.
"Towards the end of this year, barring any sharp rate hike by the Fed, we don't think the ringgit will lose its momentum, and we are expecting the ringgit to test the level of 4.10 to 4.20 against the U.S. dollar," Affin Investment Bank's chief economist Alan Tan said.
He did not expect a huge capital outflow to U.S. dollar-denominated assets as the U.S has recently indicated that they are not going to raise the interest rate aggressively.
The ringgit was traded at 4.49 against the U.S. dollar at the beginning this year. Year to date, the ringgit has risen about 4.83 percent.
Tan's opinion was echoed by Maybank Investment Bank's chief economist Suhaimi Ilias, who believed that a recovery for the Malaysian economy after a slowdown in the last two years could also support corporate earnings.
Externally, the loss of U.S. dollar momentum has augured well for emerging markets currencies, Suhaimi said.
This is amid the mounting doubts over the delivery of Trump's election and presidency promises to boost U.S. economic growth via tax cuts and infrastructure spending, which is compounded by the political uncertainty risk from potential fallout following the sacking of FBI director James Comey over the bureau's investigation into Trump's alleged links with Russia.
"We are expecting the ringgit (against the U.S. dollar) to be at 4.25 at the end of third quarter 2017 and 4.30 at the end of fourth quarter 2017," Suhaimi said.
