S&P Global Ratings predicts ringgit to bounce back 9pc by end 2024, sees no risk to sovereign rating

KUALA LUMPUR, Feb 22 — Rating agency S&P Global Ratings is forecasting a 9 per cent rebound in the ringgit by the end of this year, Bloomberg reported today.

The business news agency added that it does not see the currently depreciating currency as presenting a risk to Malaysia's sovereign credit rating.

“We do not see the depreciating ringgit as a risk to the sovereign rating,” Phua Yee Farn, a sovereign analyst at S&P in Singapore was quoted as saying.

He said the ringgit, which traded at 4.79 to the US dollar earlier today, is expected to climb to 4.40 by end 2024, and reach 4.30 by end of 2025.

Phua said Malaysia has a strong external position and is supported by a healthy amount of foreign reserves and a consistent surplus in its current account

Bloomberg also reported another agency, Moody's Investors Service attesting to the soundness of Malaysia's credit rating despite the ringgit's weakness.

Moody’s reportedly noted that almost all of Malaysia’s sovereign debt is denominated in the local currency.

S&P was reported to have estimated Malaysia's foreign debt at RM30 billion (US$6.26 billion) at the end of 2023, making up just under 3 per cent of its total sovereign debt.

Bank Negara Malaysia (BNM) said yesterday that the ringgit’s performance does not reflect the country’s economic strength even as it is now at its lowest level since the 1998 Asian Financial Crisis.

The central bank said the ringgit’s recent performance follows similar trends with other regional currencies, and attributed the slide to external factors like market adjustment to changing US interest rates and uncertainty around China’s economic prospects.

BNM’s statement came amid growing polemic over ringgit’s declines, which the Opposition blamed on the ruling coalition’s alleged poor economic management.

The central bank also said it expects the ringgit to appreciate this year, citing forecasts of an improving global economy, the government’s commitment to implement structural reforms. and the expected lowering of interest rates in advanced economies.