KUALA LUMPUR, July 21 (Xinhua) -- Analysts on Wednesday foresaw that Malaysian Ringgit will appreciate 0.2 percent to 0.5 percent against the U.S. dollar over the longer term.
AmBank Research said in a note that it continues to believe that the Ringgit would benefit from a weaker U.S. dollar and could touch 4.15 against the U.S. dollar, which is stronger than the mid-point of its long-term trading range of 3.80 to 4.50.
However, the research house maintained its forecast for the Ringgit against the U.S. dollar at 4.10 to 4.15 for 2021 and 4.05 to 4.10 for 2022.
It said the COVID-19 pandemic uncertainties, coupled with the management, the speed of vaccination rollout, and the eventual reopening of the economy, external demand's strength and domestic political challenges will impact the movement of the Ringgit going forward.
"We expect the short-term outlook for the Ringgit to weaken significantly partly on concerns over COVID-19 cases and the management of the pandemic," it said.
It also said the outbreak of this pandemic now defined as the "third wave", with lockdown measures and the enhanced movement control order in certain states of Malaysia are posing significant challenges to the economy and political space.
"The effects of these challenges to the economy and political outlook over the short term are also seen to have spilled over into the social environment. It will certainly weigh on the Ringgit over the coming months," it said.
It also said the Ringgit will need to cope with periodic appreciation of the U.S. dollar, driven by positive news from the economic data that will influence the tone of the U.S. Federal Reserve in relation to its tapering and potential rate hikes.
Also, the Ringgit will be influenced by movements in the global crude oil price i.e. Brent, moving forward.
According to the Central Bank of Malaysia, the Ringgit was traded at 4.2425 against the U.S. dollar as of Wednesday afternoon.