KUALA LUMPUR, April 28 – The ringgit is expected to appreciate by 5% against the US dollar by year-end as the greenback is now in a stabilisation mode, says UBS Investment Bank’s senior global economist and managing director Paul Donovan. “The ringgit is biased to strengthen in the range of 5% … along this line and nothing too dramatic. However, we must also accept the fact that the currency (will continue to be) more volatile,” he said at a media roundtable session here today.

However, he said, the ringgit against the US dollar exchange was not the best indicator to measure the weaknesses and the strengths of the former. “We have to see how the ringgit has been performing against the regional currencies as well.” Donovan also said the global oil prices, which had impacted the ringgit, were expected to recover in the fourth quarter of this year and they would continuously rise year-on-year.

On the country’s current account, he said, if the oil prices remained low, they might lead to current account deficit as the current low dividend paid to government this year was likely to be sustained until next year. “The oil prices will slowly go back to US$80 (RM284.40) from around US$50 in three years’ time and (on the current account deficit), I am not alarmed by this, but I think it is a situation that needs to be monitored and it is a reflection of global economic environment.”

The ringgit ended higher for the second consecutive day against the US dollar today, with investors cautious, ahead of the Federal Reserve’s monetary policy meeting this week which may discuss a possible interest rate hike. At 5pm, the ringgit was quoted at 3.5655/5685 against the greenback compared with 3.5790/5830 yesterday.

Most emerging Asian currencies were firmer against the greenback. The ringgit, however, was quoted mostly lower against a basket of major currencies. It fell against the Singapore dollar to 2.6794/6832 from yesterday’s 2.6748/6774 and eased against the British pound to 5.4072/4154 from 5.3999/4063. The local unit edged up against the yen to 2.9861/9903 from 2.9914/9947 yesterday, but slipped against the euro to 3.8760/8814 from 3.8629/8668 yesterday.

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