USD/MYR to dip to 4.12 by year-end as ringgit finds support from strong trade surplus – ANZ

The adverse pandemic situation and global financial market volatility have both visibly weakened the ringgit in recent months. Looking ahead, economists at ANZ Bank expect MYR to appreciate amid strong terms of trade and a resilient external sector.

Export sector resilient supported by demand for commodities

“Although volatility risk persists to some extent, the turnaround in Malaysia’s pandemic situation, and therefore in its economic outlook, bodes well for the currency.”

“Amid high oil prices, the terms of trade effect for the ringgit will likely be sizeable. We also expect the export sector to perform well amid continued demand for commodities and tech products, offsetting some impact from a likely softening of the global growth momentum.”

“Importantly, political uncertainty seems to be out of the way in the remainder of the year until the general elections are held, most likely in 2022, keeping the ringgit safe from gyrations in sentiment.”

“We expect USD/MYR to reach 4.12 by end-2021, falling further to 4.03 by end-2022.”