HSBC Malaysia said the ringgit will stabilise in the second half of this year (2H 2022) and move to RM4.28 to US$1 by the end of the year.

James Cheo, its global private banking and wealth chief investment officer for Southeast Asia, said the ringgit will strengthen following an improvement in global market sentiment.

“The first half of this year was volatile, but we believe the ringgit will stabilise to move towards 4.28 by the end of the year when the global market sentiment improves.”

The ringgit opened at RM4.39 to US$1 today. It hit RM4.40 to US$1 on May 19, marking the lowest rate since March 2020.

Cheo said equity inflows from foreign investors continue to trickle in year-to-date, in view of the local growth recovery and reopening of the tourism sector.

He said he expects Bank Negara Malaysia to increase the policy rate by another 50 basis points, ending the year at a 2.5% overnight policy rate.

Malaysia is also on a solid growth route and its GDP growth may move to 5.5% this year, thanks to good manufacturing and higher commodity prices, he added.

The economy expanded by 5% year-on-year, back to pre-pandemic levels, in Q1 2022.

Cheo said with pandemic restrictions relaxed, private consumption bounced back and investment stabilised, though this led to import growth outpacing exports.

“Domestic demand should accelerate further this quarter and in the next, supported by a tightening labour market.”

Fan Cheuk Wan, HSBC’s global private banking chief investment officer for Asia, said the global economic cycle will continue but at a slower rate, while inflation will gradually ease.

The United States rate hike expectations will be moderating in 2H 2022 despite lingering energy shock and supply chain disruptions, she added.

“We forecast global GDP growth to decelerate to 3.4% in 2022 and 2.9% in 2023, down from 5.8% last year.

“We expect global energy shock and supply chain challenges to push up global inflation to 7.5% in 2022, before moderating to 5.1% in 2023.” – Bernama, June 7, 2022.