KUALA LUMPUR: The ringgit, in line with other emerging currencies, will potentially rebound against the US dollar this year as the greenback is expected to be vulnerable to profit-taking.
International foreign exchange broker ForexTime Ltd chief market analyst Jameel Ahmad said the first round of interest-rate hikes in the US would likely be in September.
“However, traders will become impatient and hesitate when the second and third rounds of interest-rate hikes happen, thus resulting in profit-taking in the US dollar.
“Emerging currencies will benefit from any US dollar softness, especially the ringgit, given its undervalued and oversold condition,” he told a press conference on the foreign exchange market here yesterday.
The timing of the interest-rate hikes by the US Federal Reserve would be very much data dependent and while the giant economy’s jobs data is strong, its retail sales data remain weak.
This would mean if the rates were to be increased too soon, with a short period of time between the first and second rounds of rate hikes, consumer spending in the US could be further limited.
On the ringgit, Jameel said the recent weakness was due to speculations and stronger greenback rather than the decline in commodity prices.
He said although Malaysia’s economy is linked to commodity, the segment only made up 20 per cent of Malaysia’s exports.
“The current ringgit condition can also be seen as an opportunity for investors to look into Malaysia and I see investors becoming more encouraged than before.
“This can be stretched from manufacturing, property and foreign businesses which are looking at expanding overseas,” he added. — Bernama