KUALA LUMPUR: The ringgit may strengthen steadily over the coming months, supported by domestic indicators such as stable interest rates, easing inflation and modest but commendable economic growth.
The ringgit strengthened to 4.6800 versus the US dollar at the opening yesterday, a level last seen two months ago, as the latest US inflation data boosts hopes for an interest rate cut in the United States.
Economists attributed the ringgit's recent appreciation versus the greenback to a combination of factors, including reduced market anxiety over US interest rate moves.
Additionally, they said intervention from Bank Negara Malaysia played a crucial role in ensuring market stability and liquidity.
"Attention has shifted and speculation has eased. We expect the ringgit to strengthen slowly in the coming months. A fair value for the ringgit versus US dollar is at 4.20-4.30," said economist Dr Geoffrey Williams.
With the US Federal Reserve (Fed) expected to decelerate its policy tightening towards the end of the year, the greenback may lose some of its strength, thus providing more support for the ringgit.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said market participants had been concerned over the Fed's hawkish stance as the US inflation remained stubbornly high despite successive rate hikes since 2022.
"So, the assurance that another rate hike is not an option and the continued disinflationary trends have contributed to the weakening US dollar," he said.
Afzanizam added that since the US Federal Open Market Committee (FOMC) meeting concluded on May 1, financial markets, including the currency market, had been in a positive mood.
"For now, we are looking at the ringgit ending the year at 4.65 versus the US dollar," he added.
At 6 pm, the ringgit rose to 4.6810/6850 versus the greenback from Wednesday's close of 4.7050/7075.