Things will get worse for the Malaysian ringgit: BMI Research

HONG KONG (Jan 5): Malaysia’s ringgit, one of Asia’s worst-performing currencies over the past year, has further to fall, according to BMI Research.

One reason is because it is affected by the yuan, which is going to remain under downward pressure, BMI said in a Jan. 4 note. There will also likely be a narrowing of real interest-rate differentials between the US and Malaysia, with the latter probably staying on hold this year while the Federal Reserve increases rates by a total of 50 basis points. Further weakness in the global bond market would also put the ringgit under pressure given that around 40% of Malaysian bonds are held by foreigners.

BMI has lowered its forecast for the ringgit. It expects it to average 4.50 per US dollar this year and 4.40 in 2018, from 4.00 and 3.88 previously. The currency, which fell 4.3% against the greenback last year and 18.5% in 2015, hasn’t posted an annual gain since 2012.

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