Ringgit Expects To Trend Lower by Year-End

The Malaysian Ringgit is expected to trade lower towards the year-end due to the outflow of emerging currencies, including the local unit, to the United States and Europe following the economic improvement in both these geographies, says Malaysian Institute of Economic Research (MIER).

Executive Director Dr Zakariah Abdul Rashid said the Ringgit's exchange rate has depreciated by approximately seven per cent since May last year.
"The Ringgit is now undervalued and some correction should be taken to ensure the Ringgit can achieve its stable level," Dr Zakaria told reporters after the 19th Corporate Economic Briefing here on Thursday.

He expects the Ringgit to fluctuate between RM3.26 and RM3.30 against the greenback this year.

Yesterday, the local unit closed at RM3.26 versus the dollar.

Zakaria said the downside movement of the Ringgit would not impact investor sentiment but benefit them.

On the domestic front, inflation has accelerated in the first three months of the year as inflationary pressures continue to build up.

"Further increase is expected in consumer prices "Some mitigation measures must be undertaken to tackle the instability in the prices of goods, as well as, household finance, especially to prevent the spiraling of cost of living," he said.

Following this, MIER is revising downwards Malaysia's Gross Domestic Product growth forecast for 2014 to 5.3 per cent from its initial target of 5.5 per cent.

He said the figure was quite reasonable after taking into account the stronger fiscal consolidation process, tighter monetary policy stance and better-than-expected global market environment.

/Bernama 24-04-2014

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