KUALA LUMPUR, Jan 10 — The Malaysian ringgit is expected to appreciate to RM2.99 against the US dollar by year-end, prompted by the weaker greenback and uncertain external economy, said HSBC Ltd.
Managing Director and Head of Asian Currency Research Paul Mackel said the projected value was fairly conservative, accounting for a negative view for the dollar versus the ringgit, which attracted robust capital inflows.
"There are also indications of alpha pressures, so foreign direct investment has been picking up. These types of factors tell me that the risk capacity for the ringgit to strengthen materially is probably lesser and it has limited opportunity to outperform.
"That's why I'm only looking at a mild appreciation this year," he told a press conference on Asia Economic and Foreign Exchange Outlook today.
The domestic unit was quoted at 3.0360/0390 against the greenback at 5 pm yesterday. Mackel said the ringgit would also benefit from the expected recovery in the global economy in the second half of the year, especially driven by the recovery in China's economy, and the internationalisation of the renminbi.
"China's economy is coming back on track and this is important for the region and for other Asian currencies.
"2013 is the year for the renminbi to be more focused on internationalisation and less about appreciation.
"Up until 2012, many investors felt that the renminbi was only about trying to look for appreciation, but I think that the bulk of that story is over, its now more about the introduction of foreign exchange reform, which will help internationalise the renminbi," he said.
As the renminbi is expected to become more flexible, this will help spur other emerging currencies, including the ringgit, he said, adding that the depreciating euro would aid the performance of Asian foreign exchange markets.
On other Asian currencies, he said the Korean won and the Philippines peso are expected to attract market players this year while the Indonesian rupiah and Indian rupee would face difficulties in attracting demand. — Bernama