Malaysia’s increased fiscal deficit, its public debt levels and better economic prospects in the US is likely to weaken the ringgit against the US dollar, analysts and economists chimed in to say.
In a report from UOB, Julia Goh, Senior Economist, UOB Malaysia says a potential risk for the Malaysian Ringgit is the country’s relatively higher fiscal deficit and public debt levels.
The report further added that there are expectations the USD to MYR will be at 4.20 in 4Q21, 4.23 in 1Q22, 4.26 in 2Q22, and 4.29 in 3Q22.
The US Initial Jobless Claims data showed that applications for unemployment insurance had declined last week which is seen by the market as the US Federal Reserve achieving its goal of creating more jobs in the US suggesting that the Ringgit could weaken further.
“However, the credibility of the country’s public finances was affirmed by international rating agencies and FTSE when they retained Malaysia’s government bonds in its WGB index,” the UOB report said.
It also said that the government has also made efforts to improve budget transparency, governance, and has committed to pursuing fiscal consolidation measures including strategies to improve tax revenue.
The ringgit opened marginally firmer against the US dollar today at 9 am, the local currency was at 4.1800/1830 versus the dollar from Thursday’s closing of 4.1820/1835.
Maliza Isa contributed to the story
