PETALING JAYA: The ringgit could strengthen to around 3.80–3.90 against the US dollar if the Federal Reserve moves towards cutting interest rates, according to Rakuten Trade.
Head of research Kenny Yee said the local currency’s direction will depend largely on US monetary policy.
“If the Federal Reserve lowers interest rates, the ringgit may strengthen to around the 3.80–3.90 range. Otherwise, the ringgit is likely to hover around the 4.00 level against the US dollar,” he said at Rakuten Trade Q3 market outlook today.
He said currency movements will continue to be driven largely by external factors, including global capital flows and investor sentiment towards US-denominated assets, amid ongoing uncertainties in the global economic environment.
The outlook is clouded by geopolitical tensions and elevated crude oil prices, which have contributed to renewed inflationary pressures and may delay any easing in US monetary policy.
Despite relatively stable domestic fundamentals, the research house said the ringgit is unlikely to decouple from broader global trends, with external developments expected to remain the dominant driver of its performance in the near term.
The next US Federal Open Market Committee (FOMC) meeting is scheduled for June 16–17.
