KUALA LUMPUR, March 8 (Xinhua) -- Economists have foreseen a steady overnight policy rate (OPR) and improving economic growth prospects to support the ringgit recovery in Malaysia.

UOB Global Economics and Markets Research said in a note that the continuation of steady OPR in Malaysia at 3 percent will help to narrow the negative gap with United States rates and in turn support a further recovery in ringgit in the second half amid persistent coordinated measures by authorities to improve foreign exchange conversion as the year progresses.

According to the research house, other key drivers of ringgit appreciation include an anticipated broad U.S. dollar weakness starting in the second quarter that likely comes ahead of the first Federal Reserve (Fed) rate cut in June.

Meanwhile, Maybank Investment Bank said in a note that its foreign exchange research maintained the view of ringgit ending this year firmer versus the U.S. dollar at 4.40.

Within the next six to nine months, ringgit-positive factors include the signs of improving economic growth prospects, as per the exports rebound in January 2024 of 8.2 percent year on year after 10 straight months of decline, said the research house.

RHB Investment Bank Research also said in a note that the ringgit will be partly supported by the improvement in Malaysia's fiscal and current account balances in 2024.

According to the research house, domestic confidence is expected to improve following greater clarity in fiscal consolidation measures and improvement in the fiscal position.

"We expect the current account balance to be underpinned by the continued recovery in export and inbound tourism activities," it said.

MIDF Research also said in a note that in 2024, it believes that ringgit stands to gain from the supportive global commodity prices and sustained trade surplus.

Most importantly, the Fed and other major central banks have shifted its monetary stance from hawkish towards dovish, and thus interest differentials would narrow in 2024, according to the research house.

"We expect USD/MYR to average at RM4.38 and reach RM4.20 by year end 2024," it said.

Ringgit has stabilized recently against the U.S. dollar, improving to 4.6865 at the point of writing, versus the recent low of 4.80 on Feb 20.

This follows Central Bank of Malaysia's moves to step up engagements to boost inflow to foreign exchange market and hold its OPR. Enditem

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