The research house said on Monday in a note that although this points to a slower appreciation than previously forecasted, it will still be stronger than an average MYR 4.40 recorded last year.
Taking into account U.S. Federal Reserve (Fed) pausing rate hikes later this year and no rate cuts despite the United States experiencing below-trend growth, it foresees fund flows to return to emerging markets.
Despite the robust and sound economic fundamentals on the back of sustained growth in domestic demand, positive job market, and continued trade surplus, it noted the ringgit had weakened due to greater influence from external developments.
Apart from changing fund flows, it said the ringgit has been constrained by revised views on the Fed's future policy direction, concerns over global growth and relatively lower commodity prices.
If the strong dollar narrative continues, it said that positive growth fundamentals will have limited effect to support the ringgit outlook.
According to the note, while the dollar index remained unchanged on a year-to-date basis, ringgit on the other hand has been among the worst performing currencies, only second after the Japanese yen.
As the market priced in delayed pause by the Fed and fears on global growth outlook, ringgit practically reversed its appreciation and fell back to the lowest level since Nov. 22, and hovered around MYR 4.59 to MYR 4.60 in the past couple weeks.
This translated into -4.5 percent depreciation of the ringgit, second after -5.9 percent decline in Japanese yen.
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