KUALA LUMPUR, Nov. 16 (Xinhua) -- Malaysian ringgit, which has surged to more one-year high against the U.S. dollar, may rise to 4.00 in 2018, supported by more balanced flows, says a Malaysian analyst.
Hong Leong Investment Bank Researh's Felicia Ling Xiao Wei said in a report Thursday that the ringgit is expected to experience mild appreciation bias within 4.00 to 4.20 against the U.S. dollar range in 2018, after ending the year at 4.10 to 4.25 against the greenback.
Year-to-date, the ringgit has surged 6.85 percent to more than a year high of 4.17 against the U.S. dollar.
"Sustained trade flows and normalized foreign equities and bond outflows are expected to limit the pressure on ringgit. A more synchronized recovery in global growth will also limit U.S. dollars strength," Ling said
According to Ling, the ringgit strength will be underpinned by a confluence of domestic and external factors.
On the external front, more synchronized monetary policy normalization in the advanced economies and watered-down approach to tax cuts in the United States are expected to lead to a more subdued U.S. dollars.
Firmer oil prices are also anticipated to provide further catalyst to the ringgit as well after being in the doldrums since 2014.
Domestically, Malaysian Central Bank's foreign exchange measures to improve the balance of ringgit currency are expected to provide further support to the ringgit.
Besides, sustained high trade surplus in January to September of 69 billion ringgit has led to higher export proceeds conversion, and has offset the downward pressure on ringgit from bond outflows in June to August.
However, external events, including the potential rate hike in the United States, will continue to influence the direction of the ringgit, according to Ling.
