KUALA LUMPUR, Jan 20 – HSBC expects the ringgit to stabilise in the second half of the year and trade around RM3.57 to a dollar by year-end, says Head of Foreign Exchange Research Asia Pacific Paul Mackel. He, however, said the currency would remain volatile against the US dollar as the greenback strengthened broadly against major currencies.
“In the second half of last year, the dollar’s strength became broad and it will continue throughout this year,” Mackel said when presenting the global and economic outlook for this year here today. He said the key source of the dollar’s strength was from the monetary policy divergence between the Federal Reserve, European Central Bank and Bank of Japan.
The ringgit was top of the pack of highly volatile currency compared to other currencies in Asia following variable uncertainties. He said it was rather difficult now to manage some of the ringgit’s exposure. “With the Federal Reserve having eased its quantitative measures and with central banks in Europe, Japan and China loosening their monetary policy, the the volatility in currency markets was expected to stabilise in the second half of the year.
“Once this comes through, it would impact the ringgit too which will be less volatile,” said Mackel, adding that it would however take some time. Mackel added there might be additional weakness in the ringgit, going forward, taking into account the greenback’s upwards momentum which was expected to extend into 2016.