KUALA LUMPUR: MIDF Research is of the view that at end-2019, the Malaysian ringgit would be trading at RM4.15 against the US dollar, as the declining Brent crude oil price is not supportive of it.
Nevertheless, the research firm said the Federal Reserve’s rate cuts which would result in capital inflow to emerging markets, including Malaysia, the better fiscal position of the government and higher domestic demand resulting from an overnight policy rate (OPR) cut and steady economic growth, would help lend support to the ringgit.
“We expect the ringgit to average RM4.15 per US dollar in 2019. Year-to-date, the ringgit has averaged at RM4.13 per US dollar,” it said in a note yesterday.
In separate development, it said the OPR cut is expected to boost domestic demand. MIDF Research said the 25 basis points OPR cut, on top of low inflationary pressure and stable labour market, would continue to support both private consumption and investment in the second half 2019 (2H19).
Nevertheless, it said private consumption, particularly in the third quarter of 2019 is likely to be impacted by a higher base last year due to the tax holiday period, which ramped up household spending.
Hence, private consumption growth could experience a trivial slowdown in 2H19 from 7.7 per cent year-on-year (y-o-y) recorded in first half 2019. “We forecast private consumption to increase by 7.5 per cent y-o-y in 2019.
“Since there will be less pressure from the domestic front, we anticipate Bank Negara Malaysia to maintain the OPR at 3.00 per cent in 2019. – Bernama
