Tengku Zafrul said this is based on their overall median projections of the ringgit against the US dollar for the second, third and fourth quarter of 2022 as well as the first quarter of 2023 which stood at 4.37, 4.35, 4.28 and 4.27 respectively. – Bernama photo
KUALA LUMPUR (May 28): Foreign analysts remain optimistic about the prospects of a strong ringgit recovery in the near future, Minister of Finance Tengku Datuk Seri Zafrul Tengku Abdul Aziz said.
In a statement today, he said this is based on their overall median projections of the ringgit against the US dollar for the second (Q2 2022), third (Q3 2022) and fourth quarter (Q4 2022) of 2022 as well as the first quarter of 2023 (Q1 2023) which stood at 4.37, 4.35, 4.28 and 4.27 respectively.
He said for the overall average, foreign analysts’ projection of the ringgit against the US dollar for Q2 2022, Q3 2022, Q4 2022 and Q1 2023 stood at 4.35, 4.37, 4.29 and 4.25, respectively.
Meanwhile, Tengku Zafrul said the ringgit’s current depreciation was contributed by temporary factors which included expectations of the global monetary policy situation and the continued tightening of global liquidity, which have alarmed the international investor community
“As a result, they have reallocated funds to higher-yielding assets denominated in US dollar. This has led to the depreciation of various global currencies, including the ringgit,” he said.
He said another contributor is the weakening of the Chinese yuan due to expectations of a deteriorating China’s growth prospects following movement restrictions in major cities.
“This has an impact on the ringgit because Malaysia-China trade volume is significant with exports to China accounting for 10.7 per cent of GDP (gross domestic product) compared with 2.1 per cent in Indonesia and 1.3 per cent in Thailand,” he said.
He said the International Monetary Fund (IMF) has lowered their forecast for China’s economic growth to 4.4 per cent from 8.1 per cent in 2021.
Besides that, he said the volatile situation of global geopolitical tensions has put pressure on global economies.
“This is reflected in the value of the VIX, or the investor ‘fear index’, which increased to 25.7 points on May 28, 2022, from the previous average of 18 points.
“This has also caused investors to flock to ‘safe-haven assets’ such as gold and the US dollar, putting downward pressure on various currencies, including the ringgit,” he added. – Bernama