KUALA LUMPUR, November 7 — MIDF Research has maintained its year-end target for the ringgit at RM4.30 against the US dollar, with an expectation that emerging market (EM) currencies will strengthen. The Federal Reserve’s conclusion of its tightening cycle for the year is anticipated to be beneficial, leading to a return of fund flows into riskier markets. MIDF Research noted that Malaysia’s economic fundamentals are supportive of the ringgit, with a resilient domestic economy and well-controlled inflation.
Additionally, strong signs of recovery in China and increased electrical and electronics exports will likely improve external trade performance, while elevated global commodity prices will benefit the ringgit as a net commodity exporter. Despite optimism for the ringgit’s appreciation, MIDF Research also acknowledged potential limiting factors, such as the absence of a definitive pause by the Federal Reserve, another rise in US treasury yields, and escalating geopolitical crises in the Middle East, which could lead to renewed support for the US dollar.
The ringgit touched an all-time low in October 2023, closing the month 1.4 percent weaker at RM4.764 against the US dollar. However, MIDF Research expects the ringgit to appreciate towards year-end as more fund flows are likely to return to emerging markets.
