KUALA LUMPUR, April 8 — The ringgit is projected to strengthen further to 4.10 against the US dollar by year-end compared with 4.17 last year despite heightened uncertainty, Kenanga Research said.

The research house said it is cautiously bullish on the local note on its direction following the country’s strong economic recovery outlook.

Nevertheless, it said the local note may continue to trade under pressure in the next few months due to the volatile market environment brought about by the Eastern Europe crisis, China's stringent pandemic-control measures, and the Fed increasing hawkishness.

On the overnight policy rate, it expects Bank Negara Malaysia to raise the lending rate probably in the third quarter of 2022 after major economic indicators point to a sustainable recovery.

"The reopening of Malaysia’s international borders on April 1, coupled with the central bank’s continued accommodative policy stance, is seen to prop up economic growth in the second half of the year,” it said in a note today.

Kenanga Research said this is despite increased downside risks to both the global and domestic economies due to the Russia-Ukraine war and China’s zero Covid-19 policy.

BNM yesterday released its international reserves as at end-March, which declined for the third straight month.

It fell by US$0.2 billion or -0.1 per cent month-on-month (February: -0.3 per cent) to US$115.6 billion as at March 31, 2022, partly due to a stronger greenback.

"This is sufficient to finance 6.1 months of imports of goods and services (previously retained imports) and is 1.2 times total short-term external debt,” it said, adding that a sharp decline in other reserve assets masked a rise in gold and foreign currency reserves.

Kenanga Research said in ringgit terms, the value of BNM reserves registered a positive flip, rising by RM3.6 billion or 0.7 per cent month-on-month to RM485.8 billion. — Bernama