US interest rate cuts are expected · Malaysia's economy will take off Foreign exchange experts: the ringgit can strengthen this year

Supported by factors such as the US may cut interest rates and the Malaysian economy is expected to take off, foreign exchange experts believe that the ringgit will strengthen this year.

Satyandi, head of foreign exchange research and strategy at Bank of Malaysia in Singapore, pointed out that the Federal Reserve may soon enter a cycle of interest rate cuts to create a favorable interest rate environment for the ringgit, and the Malaysian economy is expected to take off this year, driven by various major blueprints and development plans, which will help the ringgit strengthen this year.

“If the fuel allowance rationalization measures are successfully implemented, it will also strengthen the market's confidence in the ringgit. 2024 will be a better year for the ringgit.”

In any case, he did not give a forecast of the ringgit exchange rate. Currently, the exchange rate of the ringgit to the US dollar is hovering around RM4.77.

Satyandi pointed out that the ringgit is still extremely undervalued, and this trend has continued since the oil price crash earlier.

“As a foreign exchange reserve and payment currency, the low risk nature of the US dollar will continue to attract significant demand until the Federal Reserve begins to signal that interest rates will be cut or monetary policy relaxed.”

He said that the interest rate spread between Malaysia and the US is one of the key factors affecting the ringgit trend, so when the Federal Reserve cuts interest rates, the ringgit may rebound.

“At the same time, improvements in the Chinese economy and the Chinese government's economic stimulus measures will support the renminbi and other regional currencies.”

He added that as long as Malaysia's export and investment prospects improve further, the macro-scale fundamental momentum will continue to provide support.

Compared to other regional currencies, Satyandi said that the performance of the ringgit was relatively good. In one month from March 22 to now, the exchange rate of the ringgit depreciated by only 0.88% against the US dollar.

“For comparison, the Indonesian rupiah weakened by 2.9%, the Japanese yen by 2.2%, the Taiwan dollar by 2.1%, the Philippine peso by 2%, the Thai baht by 1.8%, and the Singapore dollar by 0.9%.”

Satyandi also said that compared to other regional markets, the performance of the Malaysian financial market has been relatively steady so far, despite facing the combined effects of various risks.

“Relatively speaking, the Malaysian government and the National Bank have controlled the overall situation well.”