Research sees ringgit strengthening to 4.3 against USD by year-end

KUALA LUMPUR - The ringgit is expected to strengthen to around the 4.2000/3000 range against the US dollar (USD) by the end of the year on the back of expected "easing trends” in the United States (US), according to Rakuten Trade Sdn Bhd.

Its head of research Kenny Yee Shee Phin noted that the United States remains the epicentre of global market volatility amid the ongoing worldwide battle against inflation.

"Wall Street will continue to be the epicentre of volatility for global markets as the US Federal Reserve (Fed) tries to navigate a soft-landing scenario for the US economy. The Fed may have been overly zealous with its quantitative easing measures, with almost US$9 trillion injected.

"Despite the ongoing tapering of US$95 billion per month, the pace is too slow to have any impact, thus demonstrating its inability to combat prevailing inflation," he said during the fourth quarter market outlook webinar today.

He also mentioned that massive layoffs by American technology companies at the beginning of 2023, which are still ongoing, failed to deflate inflation, as the overall unemployment rate in the US currently stood at 3.8 percent.

"The re-emergence of bank failures in March this year reignited fears of a sectoral collapse (as had happened) during the global financial crisis. Downgrades on certain banks by S&P in August shook the sector as a warning sign.

"Even though Wall Street is experiencing a narrowing in market valuations, they remain high in historical comparison. Nonetheless, the US remains flush with liquidity," he added.

Therefore, he concluded that "as we enter the final quarter of 2023 with more expected interest rate hikes in the US, whether the US can successfully manage a controlled economic adjustment remains uncertain.” - BERNAMA