Forecasts for USD to MYR
According to a recent Reuters poll of forex strategists, the strength of the US dollar, buoyed by a robust domestic economy and high Treasury yields, is forecasted to remain a formidable force against most major currencies, including the Malaysian ringgit (MYR), as we approach the end of the year. While the dollar has shown occasional signs of weakness, it has generally proven resilient amidst concerns over global economic growth and issues in China that have dampened risk appetite. However, FX analysts predict that this dominance may start to fade into the next year as the Federal Reserve is expected to consider cutting interest rates, potentially leading to a modest weakening of the USD against major peers.
In parallel, the Malaysian ringgit has had moments of strength, in part due to uplifts from oil price gains since Malaysia is one of the prominent oil producers in Asia. Currently, the USD to MYR rate stands at 4.6845, narrowly under its three-month average, showing remarkable stability in a 3.2% trading range. Despite the positive influence of rallying oil prices, with OIL to USD trading at 79.98, which is 8.6% below its three-month average following a notably volatile period, economists hold a medium-term view that the MYR may slip further, potentially reaching 5 to the US dollar. This trend is a silver lining for businesses importing from Malaysia, signaling favorable conditions for cost savings on international transactions.
Yet the longer-term projections for the Malaysian currency present a palette of robust fundamentals, including a recovering tourism sector expected to narrow the deficit in Malaysia's services account and thus support the strength of the ringgit. The end of 2023 might see the MYR stabilizing in the range of 4.20 to 4.30 per USD, a reflection of a peak in US dollar value being reached and anticipated policy shifts by the Federal Reserve. These stronger underpinnings of the ringgit, along with factors such as the lower cost of living and more affordable real estate compared to regional peers like Singapore, are likely to make Malaysia an attractive hub for expatriates and foreign investors, further enhancing the currency's long-term appeal in the market view.
