KUALA LUMPUR, Aug 27 (NNN-Bernama) — Confidence in the local currency is expected to rebound moving forward, boosted by improving sentiments following the rising vaccination rate.
Juwai IQI chief economist Shan Saeed said the projection is based on several premises, namely, higher oil prices which would bolster the ringgit, positive export and trade volume figures, vaccination threshold hitting the 80 per cent target by mid-October and the weakening of the greenback.
“In my opinion, the ringgit outlook remains stable, and confidence in the local currency is going to bounce back.
“We at Juwai IQI maintain our stance on the ringgit outlook that we shared at the start of the year, that the local currency would be around 3.67 to 4.10 against US Dollar for 2021,” he told Bernama.
Shan said in the last four days, the US Dollar has depreciated by around 0.6 per cent against a basket of major currencies due to the United States (US) Federal Reserve’s perplexing and unfocused monetary policy, while inflation is likely to remain strong in the US economy.
“On the other hand, Bank Negara Malaysia (BNM) has played a crucial role in maintaining the structural stability of the ringgit, despite fragilities in the global macroeconomy, global equity market shenanigans, turmoil in the bond market in advanced economies, domestic hiccups and regional geopolitical uncertainties.
“BNM has maintained a very balanced stance in terms of its monetary policy outlook, which reflects the confidence of the central bank,” he said.
According to Shan, the central bank has increased the foreign exchange reserves to US$111 billion to insulate itself from the exchange rate volatility as the country navigates tumultuous times in the exogenous landscape.
“This move has paid off in the last 17 months. The central bank has established solid macroeconomic prudential tools to get leverage in the monetary system,” he said.
Shan said BNM employed tactical and strategic manoeuvres to make prudent monetary choices in tandem with the market forces to assist the financial markets.
He said BNM has proven true to its mandate of ensuring price stability, market stability and growth stability.
“The two major policy instruments, namely, the fiscal and monetary levers, will continue to play their parts in the economic policy frame.
“The amalgamation of both in these tempestuous times is the key to achieve growth confidence in the economic outlook,” he added.