KUALA LUMPUR, May 4 (Xinhua) -- A Malaysian research house said recently it continues to expect further appreciation of the Malaysian ringgit against the U.S. dollar, with a targeted average exchange rate of MYR 4.34.
MIDF Research said in a note that anticipated compression of interest rate differentials from the expected three rate cut adjustments by the U.S. Federal Reserve in the second half is expected to provide supportive momentum for emerging market currencies, including the Malaysian ringgit.
"Moreover, Malaysia's robust macroeconomic underpinnings, as demonstrated by sustained trade and current account surpluses, further reinforce our positive assessment on the local currency," it said.
Consequently, MIDF projected an upward trajectory in its MIDF Trade Weighted Ringgit Index to a level of 95 by the end of the year, indicative of a broad-based strengthening of the ringgit against other currencies.
According to the research house, the ringgit gained in April, the fourth consecutive month of appreciation.
On the back of a weaker dollar, the ringgit appreciated further by 0.6 percent month-on-month and ended the month at MYR 4.434.
It noted that the continued weakness in the dollar throughout the month was partially attributed to the change in market sentiment on future expectations, which continued to increase towards weaker economic activities. ■