KUALA LUMPUR, July 21 — The ringgit is expected to benefit from a weaker US dollar and could appreciate by between 0.2 per cent to 0.5 per cent to 4.15 against the greenback over the longer term, according to AmBank Research.
Chief economist/head of research Anthony Dass said the Covid-19 pandemic uncertainties, coupled with the management and speed of vaccination rollout, and the eventual reopening of the economy, external demand’s strength and domestic political challenges will impact the movement of the local currency going forward.
“We expect the short-term outlook for the ringgit to weaken significantly partly on concerns over Covid-19 cases and the management of the pandemic.
“The outbreak of this pandemic now defined as the ‘third wave’, lockdown measures and the enhanced movement control order in certain states are posing significant challenges to the economy and political space,” he said in a note today.
He said the effects of these challenges to the economy and political outlook over the short term are also seen to have spilled over into the social environment.
This will certainly weigh on the ringgit over the coming months although the government has rolled out another RM150 billion under the National People’s Well-Being and Economic Recovery Package (PEMULIH), bringing the total stimulus to RM530 billion or 37 per cent of gross domestic product (GDP).
Besides, he said the ringgit will need to cope with periodic appreciation of the US dollar.
“Upside risks on the greenback remain, as these will be driven by positive news from the economic data that will influence the tone of the US Federal Reserve in relation to its tapering and potential rate hikes.”
The ringgit will also be influenced by movements in the global crude oil price, moving forward, he added.
At 11.40am, the ringgit stood at 4.2400/2460 against the US dollar. — Bernama
