Ringgit set for best week since July after repatriation appeal
Published on: Friday, March 08, 2024
By:
Bloomberg, FMT
The ringgit is expected to notch up a 1.2% gain this week, the most since the week ended July 14.
Kuala Lumpur: The ringgit is set for its best weekly gain in nearly eight months as the central bank’s efforts to shore up the currency bear fruit.
The currency is poised for a 1.2% gain this week, the most since the week ended July 14.
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It bounced back from a 26-year low after Bank Negara Malaysia last Friday announced coordination efforts to encourage state-linked firms to repatriate and convert their overseas income.
Moreover, BNM this week left its key policy rate unchanged to extend its support for the currency and kept up its verbal intervention by calling the ringgit as undervalued.
The sentiment around the ringgit has shifted following “the broader range of options that policymakers have to backstop the currency”, said Michelle Chia, regional head of Treasury Markets & Research at CIMB Bank Berhad in Kuala Lumpur.
She sees capital flows spurred by possible Federal Reserve rate cuts in the second half of the year and a rebound in exports supporting the ringgit.
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CIMB forecasts the ringgit to rise to RM4.48 per dollar by mid-2024 before rallying to RM4.38 by year-end. The currency gained 0.3% on Friday to RM4.6917.
A potential Fed pivot is likely to provide relief for emerging Asian currencies battered by bets that the US central bank may delay rate cuts due to the resilience of the economy.
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Fed chair Jerome Powell said on Thursday the central bank is “not far” from gaining the confidence to begin cutting rates.
That prompted gains in most Asian currencies on Friday. The South Korean won led the pack with 0.4% gains.
In Malaysia, “it is possible that some government-linked companies are already heeding the call” from the BNM to increase their conversion of overseas proceeds into ringgit, Joey Chew, head of Asia FX Research at HSBC Holdings Plc, wrote in a note on Wednesday.
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