MIER expects ringgit to strengthen to RM3.80 against dollar in medium-term

The Malaysian Institute of Economic Research (MIER) expects the ringgit to strengthen to RM3.80 against the US dollar in the medium-term.

Executive Director Dr Zakariah Abdul Rashid said for the ringgit to revert to a fair value level, much would depend on the price of crude oil.

"If you look at the ringgit now, it is tied to crude oil prices.

"If prices of crude oil can go up, perhaps not over US$100 per barrel but maybe US$80 per barrel, the ringgit can get back to that level (3.80).

"But this is what we forecast for the medium-term. Maybe another year or year-and-a-half," he said during a briefing on Malaysia's Economic Outlook here today.

However, Zakariah pointed out the ringgit was not likely to improve much until the year-end against the backdrop of a possible hike in interest rate by the US Federal Reserve.

"Until year-end we estimate the ringgit to remain between RM4.00 and RM4.10," he said.

The local note breached the "psychological threshold" of RM3.80 against the greenback on July 6, 2015, and touched its lowest external value in the last 17 years at RM4.4725 on September 29, 2015.

The ringgit opened slightly higher versus the greenback this morning at 4.2740/2820 against Wednesday's 4.2750/2850.

Meanwhile, Zakariah said Bank Negara Malaysia has been active in conducting foreign exchange interventions to influence the level of exchange rate, which has come under strong exchange rate pressures, especially during August and September 2015.

Net international reserves continued its downward trend, registering US$93.3 billion, as at Sept 30, 2015, well below the "psychological threshold" of US$100 billion recorded on Dec 31, 2014.