KUALA LUMPUR: Efforts by Bank Negara Malaysia (BNM) to stabilise the ringgit and rebuild external reserves through repatriation and conversion are progressing positively.
Maybank Investment Bank Bhd (Maybank IB) group chief economist Suhaimi Ilias said government and central bank efforts to stabilise the local currency and rebuild reserves with support from government-linked companies are also progressing.
“The improvement in the country’s current account surplus in the first quarter this year, compared to the fourth quarter of last year, was largely driven by higher inflows of investment income,” he said in a media briefing on the market outlook of the second half of 2024 today.
He said this strongly suggests that Malaysian corporates are actually responding positively to the government’s efforts to encourage repatriation and conversion.
The ringgit has been among the best regional performers over the last three months, buoyed by a mix of favourable domestic and external factors, Suhaimi said, adding that the ringgit has stabilised, trading below 4.70 against the US dollar for almost two weeks.
He said the market is anticipating the US Federal Reserve to cut interest rates as early as September.
Maybank IB expects BNM to maintain the Overnight Policy Rate at 3%, given that inflation may average 2.4% in 2024 and 3% next year. “The dynamics on interest rates between the two central banks should further support the ringgit,” Suhaimi said.
He added: “Maybank IB anticipates the ringgit will end this year at RM4.60 against the US dollar, which aligns with our forecasts since the first quarter.”
