KUALA LUMPUR: The Malaysian ringgit is likely to be affected by fluctuating oil prices, a survey by foreign exchange executives has revealed.
The Bloomberg survey also found that the US Federal Reserve rate hike is a secondary challenge.
The oil, gas and energy sector accounts for a fifth of Malaysia's Gross Domestic Product (DP) and movements in the ringgit have largely tracked that of oil price fluctuations this year.
Some 71 per cent of those polled in a Bloomberg FX16 symposium, which was attended by FX bankers, traders, brokers and corporate treasurers, expect the ringgit to hover between RM4 and RM4.20 levels versus the US dollar.
In terms of Asian performing currencies, half of the respondents polled expect the yen to be the best performing Asian currency against the greenback through year-end, while 30 per cent of expect the Singapore dollar to outperform Asian currencies.
Half the respondents expect the central bank to cut the Overnight Policy Rate, the benchmark interest rate.
In terms of forex challenges for Malaysian firms, one third of respondents listed managing currency exposure as the greatest challenge, while 34 per cent described the domestic political instability as the greatest risk to economic growth.
Bloomberg's APAC FX Sales Strategy lead Grant Coombe said the recently-launched tri-party ticketing system has been well received by Malaysia's interbank community so far.
The tri-party ticketing system enables foreign exchange brokers to have complete visibility of trades which are captured electronically, with confirmations sent to counterparties and trade reporting authorities in real-time.
This is a departure from the previous process of brokers having to manually confirm each trade with individual parties involved.