The ringgit is likely to strengthen against the US dollar in 2024, particularly in the second half of the year towards the 4.40 level, said the Malaysian Institute of Economic Research (MIER).
Its board member Sulaiman Mahbob said that one of the factors driving the ringgit to strengthen against the greenback next year is the increase of the sales and service tax rate to 8% which would generate extra revenue for the government and improve the fiscal position.
He noted that the ringgit has been declining in 2023 prompted by weaker external demand, slower economic growth in China as well as the US Federal Reserve interest rate hikes.
“The position of the ringgit has been a matter of concern for most of us.
“We have had to deal with the divergence of interest rates between us and the US and all the other countries too,” he said during his presentation of the Malaysian economic outlook at the National Economic Outlook Conference here today.
MIER also forecasted Malaysia’s economic growth to be in the range of 4.3% to 4.6% in 2024.
Recently, Bank Negara Malaysia governor Abdul Rasheed Ghaffour said the value of the ringgit is determined by various factors such as economic performance, labour market conditions, and inflation level.
He said the central bank is promoting the use of local currency settlement for trade, rather than in US dollars, which will help reduce pressure on the ringgit.
The ringgit is Asia’s worst-performing currency after the yen, plunging last month to levels last seen during the depths of the Asian Financial Crisis 25 years ago. It fell to a low of 4.7880 to the dollar on Oct 23.