KUALA LUMPUR: Global financial services firm Nomura expects the ringgit to tread at RM4.52 against the dollar by the end of this year, and to fall further to RM4.76 by the end of 2017.
In its equities and economic outlook briefing held here earlier today, Southeast Asia Economist, Euben Paracuelles and Southeast Asia Equity Strategist, Mixo Das, outlined the justifications for this.
"First of all, we are expecting a rate hike of 25 basis points (bps) from the United States Federal Reserve (Fed) this month," said Paracuelles.
"We are also expecting two more rate hikes in 2017 from the Fed. In response, we expect Bank Negara Malaysia (BNM) to cut interest rates, also twice next year," he added.
On top of that, he stressed that Malaysia, alongside Singapore, have been marked "underperform" within Southeast Asia because of multiple compression on its respective economies.
"This, of course, is a factor, but Malaysia also has to contend with ongoing political noise that has been (going on) for a while," said Paracuelles.
"We are expecting a General Election perhaps in the second quarter of next year and if this is to take place, it will exacerbate ongoing uncertainties even more," he added.
Nomura also expects Malaysia’s Gross Domestic Product (GDP) to grow at a rate of 3.7 per cent, well below BNM's projections of 4.2 per cent.