The Fitch group unit said in a note, the short-term outlook for the ringgit remains weak due to bearish technical signals and uncertainty caused by the emergence of the Omicron variant.
It also said, the long-term outlook for the ringgit has worsened slightly given the hawkish tilts in major central banks around the world.
However, it said the significant downside will be contained by the ringgit's undervaluation in real effective exchange rate terms and stronger economic activity in 2022.
According to Fitch Solutions, since its last update in September 2021, the ringgit has weakened further in line with its view, slipping by 1.1 percent against the dollar to trade at MYR4.22/USD as of Dec. 2, from MYR4.18/USD on Sept. 24.
This brings the year-to-date average to MYR4.14/USD, which is just shy of its 2021 average forecast of MYR4.15/USD.
"While we expect the ringgit to continue losing ground to the USD in the first half of 2022, we expect USD strength to wane in the second half of 2022 and this should see the ringgit average around MYR4.20/USD in 2022, a forecast which we maintain," it said.
Latest comments