KUALA LUMPUR: The ringgit is forecast to strengthen further against the US dollar and it could reach 2.8800 against the greenback in the next 12 months primarily driven by the Chinese market, said an economist with ING Financial Markets.
Tim Condon, who is also ING Financial Markets managing director and head of research for Asia, said Asian central banks were "holding back" to prevent their currencies from being misaligned with the renminbi.
If China allowed the renminbi to appreciate, it was expected to drag along all of the Asian currencies ex-Japan, he said at a press conference on Tuesday, Nov 16.
"I think about the ringgit more in terms of what is happening with the Singapore dollar," he said.
Condon said the ringgit was expected to strengthen to below the crucial 3.0000 level against the greenback. This would also hinge on the Singapore dollar strengthening to 1.2000 against the US dollar.
ING had forecast the ringgit to be at 2.9700 against the greenback within three months and 2.9200 within six months. The Singapore dollar was expected to strengthen against the US dollar to 1.2000 within 12 months.
The ringgit was 3.1300 against the greenback at 5pm on Tuesday.
On the Overnight Policy Rate (OPR), Condon said the rate was normalised at 2.75% and that it was likely to be maintained for the next 12 months as the Malaysian economy was perceived to be under no inflation pressure.
"With a persistent output gap environment, I think is really difficult for any inflation pressure to get any traction...'' At 2.75 (percent), there is no need to move towards tightening and no need to ease further," said Condon who is currently based in Singapore.
Tim Condon, who is also ING Financial Markets managing director and head of research for Asia, said Asian central banks were "holding back" to prevent their currencies from being misaligned with the renminbi.
If China allowed the renminbi to appreciate, it was expected to drag along all of the Asian currencies ex-Japan, he said at a press conference on Tuesday, Nov 16.
"I think about the ringgit more in terms of what is happening with the Singapore dollar," he said.
Condon said the ringgit was expected to strengthen to below the crucial 3.0000 level against the greenback. This would also hinge on the Singapore dollar strengthening to 1.2000 against the US dollar.
ING had forecast the ringgit to be at 2.9700 against the greenback within three months and 2.9200 within six months. The Singapore dollar was expected to strengthen against the US dollar to 1.2000 within 12 months.
The ringgit was 3.1300 against the greenback at 5pm on Tuesday.
On the Overnight Policy Rate (OPR), Condon said the rate was normalised at 2.75% and that it was likely to be maintained for the next 12 months as the Malaysian economy was perceived to be under no inflation pressure.
"With a persistent output gap environment, I think is really difficult for any inflation pressure to get any traction...'' At 2.75 (percent), there is no need to move towards tightening and no need to ease further," said Condon who is currently based in Singapore.
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