The outlook for Malaysia’s ringgit is turning brighter, according to more than half the respondents in a Moody’s Investors Service survey.
The nation’s improving trade surplus and foreign-exchange reserves, along with the halt in the US dollar’s appreciation are supportive for the ringgit, Moody’s wrote of its poll results. The report titled Malaysia - Inside Asean: The View from Malaysia was based on a March 23 briefing in Kuala Lumpur and attended by 110 market participants. That was the same day the currency strengthened beyond 4 per dollar for the first time since August. Malaysia’s currency has rallied more than 10% this year, a turnaround from 2015 when it reached a 17-year low of 4.48 versus the dollar. Foreign-exchange reserves rose to $97bn in the last two weeks of March, while the trade surplus widened to 7.35bn ringgit ($1.9bn) in February from 5.39bn ringgit in January, official data showed last week.
Of those polled in Moody’s survey, 53% see the ringgit around 4-4.2 per dollar over the next 12 months and about a third see it in a range of 3.5 to 4. The currency was up 0.2% at 3.8938 as of 2:41 pm in Kuala Lumpur yesterday.
The survey shows participants were less upbeat on the economy, with 58% seeing a slowdown in gross domestic product growth to 4-4.5% this year from 5% in 2015. “Given the open nature of its economy – with exports and imports combined accounting for 131% of GDP – Malaysia is susceptible to a prolonged period of subdued global demand and weaker commodity prices, which will result in slower investment demand, and downward pressure on exports and government receipts,” wrote Rahul Ghosh, a Moody’s vice president and senior research analyst.